Cyprus Tax Residence

Cyprus has one of the most favorable tax systems in Europe. A transparent system of British law governs it, the jurisdiction is not offshore, complies with EU directives and international norms, there are many benefits, and tax rates are among the lowest.

Cyprus has a double taxation treaty with 67 countries; the corporate tax rate is only 12,5% and is among the lowest in the EU. Therefore, by becoming a tax resident in Cyprus, you will be able to optimize your taxes and not pay more than required. Also, in most cases, you will not have to pay taxes in your home country.

What are the benefits of tax residency in the Republic?

Advantages of the Cyprus tax system:

• According to the progressive rate, the first 19,500 € income is not taxed.
• The first 3,420 € per year is tax-free for overseas pensions, and the remaining pension above this amount is taxed at 5%.
• There is no tax on:
• passive income;
• Gains from the sale of securities;
• dividends;
• Interest from loans;
• royalties;
• property;
• luxuries and gifts;
• real estate;
• inheritance.

Income that is not exempt from tax:

• From the rental of any real estate both at home and abroad;
• From employment (official work) in Cyprus;
• Sale of local real estate or shares in companies that own Cypriot real estate;
• Any business activity, for example, if you are self-employed.

We will advise you on all the nuances of Cyprus tax legislation to optimize your taxes as efficiently as possible.

How to become a tax resident of Cyprus?

To pay taxes in Cyprus, you have two procedures:

• The 183-day rule;
• The 60-day rule.

183 days

To take advantage of this rule, you must live on the island for 183 days.

60 days

This is a favorable condition designed by the country’s government to simplify the procedure for acquiring foreign tax residency.

The terms are as follows:

• You must not have tax residency in another country;
• In a calendar year, you must reside in Cyprus for at least 60 days in total;
• You cannot live in any country in the world for more than 183 days per year;
• You must officially work or own a business in Cyprus;
• To prove that you have the conditions for a living (to buy or rent a house on the island for an extended period).

What should be done to avoid double taxation?

To avoid paying taxes in two countries, take the following steps:

• Register with the Cyprus tax authorities;
• Sign a statement that you will stay in Cyprus for at least 183 or 60 days;
• Provide a copy of your employment contract, proof of ownership of the company, proof of real estate ownership, and rental agreement;
• Provide evidence of receipt of foreign dividends or interest;
• Submit prior years' tax returns;
• All tax payments must be made;
• Indicate for which country you are requesting the certificate
• Provide to the tax authorities of your country of citizenship a certificate of Cyprus tax residency if a double taxation treaty is signed with your country.

How to pay low taxes in Cyprus?

The Republic has some of the lowest taxes in Europe. However, if the country of which you are a citizen considers you and your family as its residents, residency in Cyprus will not play any role — you will have to pay taxes in your country.

Therefore, to minimize the risks, we recommend you move to Cyprus as a family and establish the center of your life here (buy or rent property, work, own a business, have your children attend local schools, etc.).

Contact SPM — we work on a one-stop-shop principle. We will help you realize your goal, advise you on all issues and tell you how to move to Cyprus: finding a house, documents, opening a bank account, and much more.

 

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