The Cyprus non-domiciled tax regime
Foreign persons wishing to move their tax residency to an alternative jurisdiction are always on the lookout for options that can meet their personal, business and financial needs in a practical and efficient manner.
Cyprus is considered to be a prime destination for foreigners, both EU and non-EU, who for various reasons are considering relocation, either as a short-term or as a long-term solution. By becoming tax residents in Cyprus, such persons are automatically considered to be Cypriot non-domiciled (“non-dom”) tax residents. The non-dom status is applicable for a maximum of 17 years.
What the non-dom status essentially means:
Dividend and interest income earned by non-domiciled individuals are specifically exempt from Cyprus taxation, irrespective of the source country and whether the funds are remitted to Cyprus or not.
In addition, there is a complete tax exemption on gains from sale of shares and other qualifying titles, and on capital gains which do not relate to immovable property situated in Cyprus.
How to become a Cypriot non-domiciled
tax resident
Foreign persons can become Cyprus tax residents either through the usual 183 days test, or through the alternative and more practical 60-day rule, which is subject to certain conditions.
Specifically, individuals who do not remain in any other country for one or more periods exceeding 183 days in total during any given tax year, and who are not tax resident in any other country for that year, shall be considered Cypriot non-dom tax residents for the year in question, subject to the following conditions being cumulatively met:
- Physical stay in Cyprus for at least 60 days during the year of assessment; and
- Carrying of any business in Cyprus, or be employed or being a director of a Cypriot company; and
- Maintaining a permanent residence in Cyprus, either owned or rented.
Other benefits & incentives
Apart from the benefits related to the non-dom status, Cyprus offers an array of other attractive tax elements for individuals, such as relatively low personal tax bands (with the first €19,500 being tax exempt), as well as a 50% exemption on remuneration from first employment in Cyprus, applicable for 17 years.
These tax benefits, combined with the high and envious quality of life, pleasant Mediterranean climate and abundance of blue flag beaches, modern facilities and infrastructure, safety and low crime rate, high-end properties, international schools, advanced medical care facilities as well as cosmopolitan life, make a very strong case for Cyprus as a supreme place to work, live and raise a family.
Over our following newsletters we will separately be covering specific areas of interest in more detail. Stay tuned.
See the first edition of THE USA REACH here >
More about Marios Yenagrites
Tax Manager of Totalserve Management
Marios is a Fellow Chartered Accountant and ICPAC member (Institute of Certified Public Accountants of Cyprus) with a BSc in Accounting and Finance from LSE and an Advanced Diploma in International Taxation (ADIT).
With years of experience with Big Four firms before joining Totalserve, he offers extensive expertise in everything related to Cyprus and International taxation ranging from tax consultancy & opinions, planning & structuring, corporate and HNWIs.
We encourage you to reach out and contact Marios Yenagrites directly to discuss how our Group can help your firm and your clients.
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