Cyprus Tax Residency and Non-Domicile Rules

Cyprus tax residency for individuals is determined by the number of days spent in the country during a calendar year (183 days). The rule has, however, been amended to 60 days as of 1st January 2017. This means that you can be considered as a Cyprus tax resident provided that you satisfy either the 60 days or the 183 days rule. The amendment is made to attract a significant number of individuals (investors, entrepreneurs, digital nomads, artists, sportsmen, crew members, foreign employees, and other business people) who do not fulfill the tax residency requirements in any country. 

Apart from staying in the country for at least 60 days in the tax year, the following conditions must be met by an individual to be considered for Cyprus tax residency under the 60 days rule:

  • Do not reside in any other single state for a period exceeding 183 days
  • Is not tax resident in any other state
  • Carry out business activities in Cyprus and/or work in Cyprus and/or be a director in a company that is tax resident in Cyprus at any time of the tax year in question.
  • Maintain a permanent residence in Cyprus (either owned or rented).

Non-Domicile Tax Status

Cyprus offers all immigrants the opportunity to assume the so-called Non-Dom status. This is especially interesting from an economic standpoint. The significant benefits which may be reaped from relocating to Cyprus and acquiring the Non-Dom status are one of a kind, incomparable to anywhere else in Europe.

A person with a Non-Dom status in Cyprus has the right to conduct business via so-called offshore companies. This means much flexibility for individuals owning zero-tax-companies and offshore bank accounts, as well as a full tax exemption for all profits gained from their offshore activities. If individual wishes to conduct international business out of Cyprus and therefore needs business premises and a business tax file number to take advantage of value-added tax, he should strongly consider setting up a legal person in Cyprus.

Besides the fact that Cyprus has one of the lowest corporate taxes in Europe, setting up a limited liability company (LLC) in Cyprus has another distinct advantage:

Advantages of Obtaining Tax Residency in Cyprus

It Is Beneficial To Be A Resident In Cyprus Compared To Many Other Countries As The Tax Regime Provides Many Advantages:

  • Cyprus tax residents are liable to income tax on their worldwide income, but the first €19,500 is tax-free.
  • Interest and dividends are liable to “defense contributions” instead of income tax, but non-Cyprus domiciles are exempt.
  • You can choose whether your foreign pension income is taxed at the income tax rates or a flat 5% rate (with the first €3,420 tax-free).
  • There is no capital gains tax on the sale of shares. When it comes to property, only real estate in Cyprus is taxable.
  • There is no inheritance tax in Cyprus.

Required documents for Cyprus Tax Residence

The required documents for obtaining Cyprus tax residence certificate with Non-Domicile Status:

  • passport copy
  • bank statement for the last six months to demonstrate sufficient funds to live on
  • source of income
  • health insurance
  • residence rental agreement
  • yellow slip from immigration (MEU1 application form required for EU Nationals)
  • tax registration forms

Tax residency by the establishment of Cyprus entity

One of the most popular ways to become a Cyprus Tax Resident is by registering your own private company, which employs you.

By establishing a Cyprus Company, foreign individuals can obtain work permits and tax residency certificates (Cyprus non-domiciled tax status) from the authorities. This option allows the expatriate shareholders and employees of the company to apply for residency status.

A Cyprus Company or business offers many tax and business possibilities. This includes a low corporate tax of 12.5%, 100% foreign ownership, no exchange restrictions, free profit repatriation, all benefits accruing from Cyprus’ nearly 55 double tax treaties, etc.

If you want more information on how to become a Cyprus tax resident, please fill the form below and hit the submit button.

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