Tax Residency in Cyprus
Since 1992, Feod Group has been providing a wide range of corporate, immigration and legal services in Cyprus and other EU countries.
✓ International tax planning
✓ Tax optimization in Cyprus
✓ Comparison of taxes across various EU jurisdictions
✓ Selection of the best tax regimes and benefits
Cyprus tax system
Are you looking for a reliable and advantageous solution for your business or personal finances? Cyprus is exactly what you need! The tax system in Cyprus is one of the most popular and beneficial in the EU, known for its simplicity and numerous benefits for both corporate and individual taxpayers.
Cyprus is not considered an offshore or tax haven jurisdiction but is classified as a low-tax jurisdiction fully compliant with the laws and directives of the European Union, OECD, and international standards. This means you can take advantage of low EU taxes without the legal risks associated with offshore zones.
Cyprus’s legal system, based on English law, is structured and comprehensible. Combined with low taxes and access to all EU tax directives, it provides an opportunity for legal tax optimization.
Advantages of the Cyprus Tax System
Cyprus offers some of the lowest tax rates in the European Union, making it especially attractive for businesses and individuals seeking tax optimization and reduced tax burdens. Notable benefits include 0% tax on dividends, 0% tax on the sale of securities (stocks, bonds), 0% wealth tax, and 0% inheritance tax.
- Compliance with International Standards
The tax system in Cyprus fully complies with international norms and directives of the European Union and the Organization for Economic Co-operation and Development (OECD). Cyprus is not an offshore jurisdiction but a low-tax jurisdiction, making it an ideal place for legal tax minimization.
- Network of International Agreements
Cyprus has signed over 65 double tax treaties with various countries. These agreements help avoid double taxation on income earned in different jurisdictions, promoting financial efficiency and international operations.
- High Level of Legal Protection
Cyprus offers a high level of legal protection, providing reliable mechanisms to safeguard the rights and interests of its tax residents.
- Simplicity and Transparency
The tax system in Cyprus is organized to make understanding tax obligations and opportunities straightforward. This clarity is further supported by a legal system based on English law, ensuring reliability and predictability.
Cyprus Tax Residency Status
To take full advantage of Cyprus as a low-tax jurisdiction and optimize your tax obligations, you need to become a tax resident of Cyprus.
What is Cyprus Tax Residency Status?
A Cyprus tax resident is an individual or legal entity subject to taxation in Cyprus based on residence, permanent place of abode, or registration for a legal entity. In other words, your tax residency status determines the country where you will pay taxes.
By obtaining tax residency status in Cyprus, you are required to file a tax return and pay taxes on your income from various sources worldwide.
How to Become a Tax Resident of Cyprus?
There are two main ways to obtain Cyprus tax residency status: the “183-day rule” and the “60-day rule.”
- 183-Day Rule
- An individual becomes a tax resident of Cyprus if they spend at least 183 days in Cyprus within a tax year.
- 60-Day Rule
- According to the “60-day tax residency rule,” an individual can become a tax resident if, during the relevant tax year, they:
- Spend at least 60 days in Cyprus.
- Are employed by a company registered in Cyprus or hold a position such as a director (with mandatory salary and social insurance contributions).
- Maintain this employment, business, or management until the end of each year in which Cyprus tax residency is requested.
- Have a company bank account and a personal account for the beneficiary.
- Have a permanent residence in Cyprus (owned or rented).
- Are not a tax resident of any other country or spend more than 183 days in another country during any year when Cyprus tax residency is requested.
Both options provide the opportunity to enjoy attractive tax benefits and optimize your taxation according to your needs and goals.
Learn more about the procedure for obtaining Cyprus tax residency status from our specialists!
Personal Taxes in Cyprus
The tax system in Cyprus for individuals offers maximum flexibility with minimal obligations. Cyprus not only provides low personal income tax rates but also a wide range of allowances and exemptions, making it an attractive place for living, investing, and doing business.
Tax Rates and Exemptions
Individuals who are tax residents of Cyprus are taxed on their worldwide income. However, the tax system offers significant advantages. For example, personal income tax in Cyprus is applied on a progressive scale from 0% to 35%, with the first €19,500 of income being tax-exempt. Additionally, foreign employees earning more than €55,000 per year can benefit from a 50% reduction in income tax for 17 years.
Cyprus is a party to over 65 tax treaties, providing for zero or reduced tax rates on dividends, interest, royalties, and pensions received from abroad.
- Income Tax and Social Contributions: The lowest in the EU
- Gift Tax: No tax on gifts to spouses or family members up to the third degree of kinship
- Inheritance and Wealth Tax: None
- Annual Property Tax: None
- Dividends Tax: 0%
These provisions make Cyprus a highly favorable jurisdiction for personal tax planning and financial efficiency.
➡️ READ MORE: Taxes for Individuals in Cyprus
Tax Advantages of Non-Domicile Status in Cyprus
In addition to Cyprus’s attractive tax system for individuals, there is the concept of non-domiciled tax residency, which offers additional benefits for those choosing the island as their tax residence.
Non-Domicile Resident Status: This special tax regime is for individuals who reside in Cyprus for at least 60 days each tax year, have close personal ties to the country, but do not plan to make Cyprus their domicile (permanent residence).
According to the non-dom concept, foreigners who decide to transfer their personal tax residency to Cyprus will automatically benefit from tax advantages and exemptions for the subsequent 17 years after relocating to Cyprus and obtaining tax residency status.
Advantages of Non-Domicile Status
Individuals qualifying for the non-dom regime are exempt from taxes on interest, dividends, and capital gains (except for capital gains arising from the sale of immovable property in Cyprus).
➡️ READ MORE: Tax Optimization in Cyprus
Corporate Taxes in Cyprus
One of the most attractive reasons many choose to register companies in Cyprus is the low corporate taxes and benefits that allow for legal tax optimization.
Cyprus has one of the lowest corporate tax rates in Europe, at just 12.5%. This means that companies registered in Cyprus can benefit from competitive tax conditions.
There is a 0% tax on income from dividends, interest, and other passive income, regardless of whether the income is earned in Cyprus or globally.
Capital gains tax applies only to profits related to immovable property located in Cyprus. A 20% rate is levied on profits from the sale of immovable property in Cyprus or from the sale of shares in companies owning immovable property in Cyprus.
Cyprus is also an attractive location for establishing intellectual property companies, thanks to the special IP Box regime. Under this regime, 80% of profits that qualify are exempt from tax. With a corporate tax rate of 12.5%, this can result in an effective tax rate of just 2.5%.
Tax Residency for Legal Entities in Cyprus
Tax residency for legal entities in Cyprus is confirmed upon obtaining a Certificate of Tax Residency from Cyprus, issued under the following conditions:
- Presence of a Functional Office and Employees in Cyprus (Substance)
- Cyprus Resident Directors
- Conducting Board Meetings and Decision-Making in Cyprus
- Decision-Making Center Located in Cyprus
- Submission of Tax Reports in Cyprus
Cyprus offers a favorable tax environment for businesses. Corporate taxes in Cyprus play a crucial role in attracting companies and investors from around the globe. This contributes to Cyprus’s development as an international business hub, drawing attention from entrepreneurs and investors alike.
➡️ Why Cyprus is the Best Choice for Business in Europe in 2024
Our tax experts and lawyers in Cyprus specialize in tax planning and legal tax optimization! We provide a wide range of services, including tax planning consultations, analysis of tax obligations, document preparation, and legal support.
Tax Consultation Services in Cyprus
Obtaining Tax Residency Status in Cyprus with Feod Group Lawyers
Feod Group, an international legal firm with presence in Cyprus and Ukraine, offers a comprehensive range of services to obtain tax residency status in Cyprus. If you are interested in becoming a tax resident of this attractive island, our experts will provide you with comprehensive support.
- Consultations on all aspects of the process and Cyprus tax system
- Recommendations on tax optimization
- Preparation of necessary documents
- Guidance throughout the process of obtaining tax residency status
Don’t miss the opportunity to optimize your tax obligations and improve your financial prospects!
Cyprus Taxes - FAQ
What are the benefits of Cyprus tax residency status?
Cyprus offers advantageous tax structuring opportunities and legal tax optimization due to its low tax rates and tax incentives:
- Legislation allows foreigners to become tax residents of Cyprus in just 60 days.
- 0% tax on dividends and interest income.
- No wealth, inheritance, or gift tax.
- Income up to €19,500 per year is exempt from income tax.
- 50% exemption on income for individuals earning over €55,000 annually in Cyprus.
- No annual property tax.
What is a Cyprus Tax Residency Certificate?
A Tax Residency Certificate is a document confirming that an individual or entity is a tax resident of Cyprus for taxation purposes.
How to obtain a Cyprus Tax Residency Certificate?
To obtain a Cyprus Tax Residency Certificate, you need to:
- Register with the Cyprus Tax Department and obtain a Cyprus Tax Identification Number.
- Complete and submit an application form to the tax authorities for the certificate.
- Declare your intention to reside in Cyprus for 183 days or more in the current tax year.
- Submit tax declarations and documents regarding foreign dividends or interest received.
- Provide documents proving your residency in Cyprus (property ownership or rental agreement).
Can you obtain Cyprus tax residency status if you do not live on the island for 183 days?
Yes, you can. You can obtain tax residency status by residing in Cyprus for 60 days, provided certain conditions are met. Additionally, if your center of life interests is in Cyprus, you may also be considered a tax resident even if you live on the island for less than 183 days per year.
What documents are needed to obtain Cyprus tax residency status?
Requirements may vary depending on the specific situation, but generally, you will need to provide: proof of residence in Cyprus, documents confirming business activities or employment, and documents verifying the source of funds.
Article author
Anastasia Taran Head of Corporate Services
Ukraine In 2013, she graduated in law from the National University «Odessa Law Academy» with honors and received a Master of Law degree. Anastasia Taran has experience in international and contract law, as well as corporate and tax law in Europe. Within the framework of Feod Group, she specializes i...
In 2013, she graduated in law from the National University «Odessa Law Academy» with honors and received a Master of Law degree. Anastasia Taran has experience in international and contract law, as well as corporate and tax law in Europe. Within the framework of Feod Group, she specializes in immigration and corporate law of European countries, particularly:
- family and corporate immigration solutions.
- establishing a business in Europe.
- personal and corporate taxation in Europe.
- opening accounts in European banks.
- obtaining a tax resident status.
Why clients choose Feod Group
Since 1992, Feod Group has been providing a wide range of legal, business and immigration services in Europe, the USA and other countries of the world.
The company has accredited western lawyers, experts in various fields of law and jurisdictions of the world.
Having offices in Europe and the USA, Feod Group provides rapid paperwork and maximum customer comfort.
We provide our clients with related services, such as relocation and adaptation abroad, organizing family relocation abroad, enrollment of children in schools and many other services.
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