Cyprus Tax Residency
The best deal for professionals and entrepreneurs.
Tax residency for physical persons.
Tax exemptions and many other advantages apply for individuals relocating to Cyprus under the 60 or 183 days rule. Cyprus Tax Residency can be obtained with the below procedures:
The 183 days tax resident rule.
An individual who spends more than “183 days” in a calendar year is considered to be a Cyprus Tax resident and will be taxed in accordance with the provisions of the Cyprus tax Laws. A Cyprus Tax resident is taxed on his local and international income under the Cyprus tax regime.
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 does the rule applies?
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 :
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.
Non-Domiciled tax resident individuals.
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. Therefore a person that was never considered before as a tax resident of Cyprus may qualify for a non-domiciled status and take benefit of the following advantages provided by the Cyprus tax regime for 17 years consecutive years that he will be considered to be a tax resident of Cyprus.
Advantages for Non-Domiciled individuals. Exemptions overview.
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.
Individuals who are Cyprus tax resident – whether this is determined under the “183 day rule” or under the “60 day rule” – are subject to tax in Cyprus on their worldwide income but certain exemptions apply.
A Cyprus tax resident individual is exempt from taxation in Cyprus on his/her worldwide (Cyprus and foreign sourced) dividend and ‘passive’ interest income where the individual is not domiciled in Cyprus for Cyprus tax purposes. An individual who does not have a “Domicile of Origin” in Cyprus (as defined in the Wills and Succession Law) is only considered to be domiciled in Cyprus for tax purposes when the individual has been a tax resident of Cyprus for a period of at least 17 years out of the last 20 years prior to the tax year in question. “Domicile of Origin” is acquired at birth and as a rule is the same as the domicile of the father at the time of birth, and in exceptional cases of the mother.
For individuals with “Domicile of Origin” in Cyprus other rules are used to determine the individuals’ domicile status for tax purposes.
Profit from the sale of securities – which include, inter alia, shares, bonds, debentures and options thereon – is exempt from taxation in Cyprus except in certain cases where the value of the shares derives from immovable property located in Cyprus
Employment income exemption for employments exercised in Cyprus.
This exempts from Cyprus income tax – for a period of 10 years – 50% of remuneration from employment exercised in Cyprus by any individual who was not a tax resident of Cyprus before the commencement of the employment provided that the annual remuneration exceeds €100.000. Determining whether an individual was a tax resident of Cyprus prior to commencement of the employment is subject to conditions.
Employment income exemption for employments exercised outside Cyprus.
This exempts from Cyprus income tax any gains from employment exercised outside Cyprus for more than 9o days in aggregate in the tax year for a non-Cyprus tax resident employer/foreign permanent establishment of a Cyprus tax resident employer.