Foreign entrepreneurs choose the low tax jurisdiction of Cyprus as their tax residence under the non-domicile status. The EU state member country is an attractive tax destination both for companies and high net worth individuals and its widely used as a residence for their operations and also for family relocation.
Any national individual can apply for the Non-Dom Tax Residency under the new 60 days or the previous 183 days rule. A Cyprus Tax resident under the 60 or 183 day rule is subject to tax in Cyprus on his/her worldwide income.
According to the Cyprus legislation, an individual who spends more than 183 days in Cyprus territory, is considered a Cyprus Tax resident. As from the tax year 2017 the new, 60 days rule can be additionally applied for individuals who want to acquire the Non-Domicile Status.
Benefits on income and exemptions.
- Profit arising for the sale of securities that include shares, bonds, debentures and others is exempted from taxation in Cyprus.
- No withholding tax on the repatriation of income as dividends, interest and royalties.
- 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.
- 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.
- No estate duty, wealth tax, gift tax or inheritance tax
- Low social insurance contributions
The 60 days rule. How is applied?
The rule attracts investors, entrepreneurs, international high earning employees, remote freelancers and even artists.
An individual who in the relevant tax year:
a. do not reside in any other country for a time period of more than 183 days(aggregate) and
b. is not a tax resident in any other country and
c. resides in Cyprus for at least 60 days and
d. has various other Cyprus ties such as :
- contract of employment
- he is a business owner
- 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.
Please note that the rule of 183 days is still valid for individuals and if a person resides in Cyprus for more than 183 days no further criteria as above are needed.
The 60 days count as below.
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.
Documentation Required for Tax residency.
- Passport copy
- Bank statement – a 6 months old statement proofing sufficient funds for the individual
- Proof of source of income
- Tax department registration forms
- Health insurance
- Residence rental agreement
- Yellow slip (residency permit issued for EU nationals)
The other way.
Another way to obtain the Tax residency Status in Cyprus is by registering an establishment of a Cyprus company. The registered entity can then employ the interested for the tax residency. Through this process individuals can obtain a work permit in Cyprus and a tax residency (non-domicile status). Shareholders, directors and employees of the Cyprus entity can apply then for residency.