Tax residency

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Tax residency. Become a Cyprus Tax resident.

Tax exemptions and many other advantages apply for individuals relocating to Cyprus under the 60 or 183 days rule.Cyprus tax residency can be acquired with two procedures.

The 183 days tax resident rule.

An individual who lives in more than “183 days” in a year is eligible to become Cyprus Tax resident and benefit from all the Personal Tax Advantages in Cyprus.

A Cyprus Tax resident is taxed on his local and international income under the Cyprus tax regime. The individual has then the opportunity to be taxed on his international income and avoid double taxation.

The 60 days tax resident rule.

The 60 days tax residency rule came in 2017 as an amendment to the “183 days” rule and provides incentives to high profile individuals, professionals and executives to become Cyprus Tax residents. The 60 days rule is effective as from tax year 2017. An individual can become a tax resident by either the case.

How tax residency via the 60 days rule applies to individuals?

Any person who in the relevant tax year:

  • do not reside in any other country for a time period of more than 183 days(aggregate) and
  • is not a tax resident in any other country and
  • resides in Cyprus for at least 60 days and
  • has various other Cyprus ties such as :
  1. contract of employment
  2. he is a business owner
  3. he is a director of a Cyprus Tax resident company.

The above must take place in a tax year and considered not valid in case of termination of employment during the tax year. In addition, the individual must maintain a residential property during the tax year either owned or rented.

How do the days count?

For both 60 and 183 days rules, the days count in and out of Cyprus territory are the below:

  • The day of departure from Cyprus counts as a day of residence outside Cyprus. 
  • The day of arrival in Cyprus counts as a day of residence. 
  • Same day arrival and departure from Cyprus counts as a day of residence in Cyprus.

Advantages.

Cyprus Tax residents benefit from tax exemptions in their income.
An individual with annual remuneration of more than €100.000 and who was not a tax residence in Cyprus before the employment, is entitled for 50% tax deduction on his income.
This deduction refers to income deriving from Cyprus and the rule is valid for a period of 10 years starting on the day of his employment.

Income Tax rates.

Table 1 No deduction

Table 2 50% deduction

Income Tax Rates Cyprus
50% deduction table

This deduction refers to income deriving from Cyprus and the rule is valid for a period of 10 years starting on the day of his employment.

Individuals with Non-Domicile status.

An individual is considered to be domiciled in Cyprus for tax purposes when he has been a tax resident for at least 17 years out of the last 20 years prior to the tax year in question. An individual who is not domiciled in Cyprus for tax purposes is considered a tax resident and he is exempted from taxation in Cyprus on his worldwide income (Cyprus and worldwide sourced), dividends and interest. This is considered a Non-domiciled status.

Exemptions overview.

Profit arising for the sale of securities that include shares, bonds, debentures and others is exempted from taxation in Cyprus. Please note that in the cases where the shares value comes from real estate in Cyprus the above rule is not applied.

Employment Income Exemption.

50% of remuneration from employment in Cyprus is exempted from income tax for the first 10 years. This rule applies for individuals that were not tax residents before the commencement of the employment and provided that the annual remuneration exceeds €100.000.

Exemptions on income from employment out of Cyprus

An individual who is employed outside of Cyprus – to a foreign permanent establishment of a Cyprus tax resident employer for more than 90 days aggregate in a tax year, is exempted from income tax.

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