andrew henderson menu

Andrew Henderson

Founder of Nomad Capitalist and the world’s most sought-after expert on global citizenship.

ABOUT THE COMPANY

What we’re all about

MEET OUR TEAM

Meet our 80+ global team

CONTACT US

We’re here to serve you

FAQS

Your questions answered

TESTIMONIALS

Read our testimonials

NEWSLETTER

Get free email updates

NC-image-menu

ACTION PLAN

Our flagship service for entrepreneurs and investors

ACTION PLAN ELITE

Create your Action Plan directly with the Mr. Henderson himself

CITIZENSHIP BY DESCENT

Claim a second passport based on familial connections

ALL SERVICES

Click here to see all our products and services

PASSPORT INDEX

Discover the world’s best passports to have in an ever-changing world

CITIZENSHIP MAP

Explore the citizenship options using our interactive citizenship map

TAX MAP

Explore the tax details for countries using our interactive tax map

ALL RESEARCH

Click here to see all of our research and interactive tools

THE WORLD’S #1 OFFSHORE EVENT

Learn from our R&D playbook and meet like-minded people at our annual event.

NOMAD CAPITALIST THE BOOK

Andrew Henderson wrote the #1 best-selling book that redefines life as a diversified,
global citizen in the 21st century… and how you can join the movement.

Freedom • Global Citizen

How to Establish Tax Residency in Cyprus

Fallback Image

This article will examine setting up tax residency in Cyprus, why it can be beneficial, and the application process. 

Does going offshore and finding a more favorable tax regime sound like a good idea? Cyprus offers no capital gains tax and no wealth or inheritance taxes. 

At Nomad Capitalist, we help entrepreneurs and investors with asset protection by creating holistic plans. Contact our team if you’d like our expert advice. 

Why Cyprus?

Simply put, due to its favorable tax regime. There is no capital gains tax on assets other than immovable property located in Cyprus. No wealth or inheritance taxes. 

But the main advantage of Cypriot Tax Residence is so-called non-domiciled taxation. In simple terms, the non-domiciled Cyprus tax residence status means you’re exempt from being taxed on income from dividends, interest, and rental income, independent of location source. 

Income from employment carried out outside Cyprus is exempted from Cyprus income tax, provided that the employment exercised outside Cyprus exceeds 90 days per tax year. This will require proper structuring of your business structure to be sure not to trigger unwanted Permanent Establishment or CFC rules. 

And the best thing about Cyprus Tax residence and non-domiciled taxation is that this regime is valid for 16 years.

As well as the relevant legislation offering unilateral relief from international double taxation, Cyprus has agreed on double taxation treaties with more than 60 countries to avoid double taxation.

Tax Residency in Cyprus

Would becoming a Cyprus tax resident work for you?

Cyprus counts you as a tax resident if you:

  1. Spend 183 days in Cyprus 
  2. Spend 60 days in Cyprus under the condition that you:
    1. Do not spend more than 183 days a tax year in any other country.
    2. Are not tax resident anywhere else.
    3. Carry out any business in Cyprus and/or be employed in Cyprus and/or hold an office (director) of a company tax resident in Cyprus at any time in the Cyprus tax year, provided that it is not terminated during the tax year, and
    4. Maintain in the tax year a permanent residential property in Cyprus which is either owned or rented by you.

Cyprus Tax Residency Application Process

Here are the steps to becoming a tax resident of Cyprus.

Applying to Become a Cyprus Tax Resident By Company Formation

If you are unable to spend 183 days in Cyprus and the 60 days rule suits you more due to your busy schedule, then forming a company in Cyprus is a mandatory requirement.

There’s no need to worry about transferring all your business activities to Cyprus. In fact, we don’t recommend you transfer anything near the majority if your current business structure is tax optimized.

However, Cyprus has a decent corporate tax system and one of the lowest tax rates in the whole of the EU. If you would like to know more about Cyprus residence by investment, contact our team, and let us help you go where you’re treated best.

In terms of forming a company, you are going to provide the following, however:

  • Name of the company to check its availability.
  • Name, ID/Passport number, birth dates, jobs, and full address of the directors, secretary, and shareholders of the company.
  • Purpose and activities of the company.

Once you have prepared these documents, the next steps are to:

  • Form a Cypriot company and hire yourself as a director. You will need to pay yourself a salary and make mandatory social contributions.
  • Obtain a Social Security Number and open a corporate bank account in Cyprus, which can take up to three months.
  • Transfer at least €41,000 to the bank account to satisfy Cyprus immigration laws.
  • Apply in person for the employment permit and temporary residence at the Civil Registry and Migration Department.
  • Wait up to six months for approval.

For EU and non-EU citizens, becoming a tax resident in Cyprus is the same process. However, there are differences between obtaining residency and work permits. EU citizens are not required to obtain special permits to live in Cyprus, while non-EU citizens need to obtain the right visa and permit. 

If an individual has paid all their taxes, they can obtain a tax certificate from the Cyprus Tax Office to show to other countries. To obtain this certificate, they need to apply through the relevant channels.

Tax Residency in Cyprus FAQ

What Are the 60-Day Rule and the 183-Day Rule?

Under the Cyprus Income Tax Law, there are only two ways to become Cypriot tax residents, either by the 60-Day Rule or the 183-Day Rule. A tax resident of the Republic of Cyprus is an individual residing in the Republic for one or more periods totaling more than 183 days, the 183-day rule, within a tax year, and an individual who meets the conditions under the 60-day rule (for every tax year).

The conditions for the 60-day rule are that the Cyprus tax resident person:

  • Resides in Cyprus for one or more periods for an aggregate of at least 60 days.
  • Does not reside in any other single state for one or more periods that exceed 183 days in total.
  • Is not considered tax resident by any other state for the same tax year.
  • Carries out business in Cyprus, and/or is employed in Cyprus and/or holds office (i.e., directorship) in a company tax resident in Cyprus until 31 December of every tax year).
  • Maintains a residential property in Cyprus, either owned or rented.

How are the days calculated for the ‘183-day rule’ and the ‘60-day rule’?

For the purposes of both the ‘183-day rule’ and the ’60-day rule” days in and out of Cyprus are calculated as follows:

  • 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 in Cyprus.
  • arrival and departure from Cyprus on the same day counts as one day of residence in Cyprus.
  • departure and arrival in Cyprus on the same day counts as one day of residence outside Cyprus

What Does Non-Domiciled Status Entail?

For this tax residency status, you need to obtain a unique tax number from the Tax Department. This tax number comes in very handy when opening bank accounts. 

You also need to prove that you are not Cypriot by descent by sharing the birth certificates of your parents. 

As a company director, you must pay 8% of your employer-based income to National Insurance.

Additionally, your profits from Cypriot company will be subject to the standard corporate tax rate is 12.5%, although start‐ups can pay less. But remember, we said that in the case of having a tax residence in Cyprus, your main operating business should be outside of Cyprus. 

You are exempt from any income tax (provided you take dividends instead of salary) you’ve earned working for a Cypriot company for 17 years under the country’s income tax law.

Where in the World Is Cyprus?

Is Cyprus Part of Europe or Asia?

Geographically, Cyprus forms part of Asia but is an EU member state. Cyprus lies south of Turkey and west of Lebanon. 

Do They Speak English in Cyprus?

Yes. Greek and Turkish are the official languages. However, Cyprus was ruled by the UK before becoming independent from Britain in 1960, and English is spoken. The country also has a Common law-based legal system. 

GET ACTIONABLE TIPS FOR REDUCING TAXES AND BUILDING FREEDOM OVERSEAS

Sign up for our Weekly Rundown packed with hand-picked insights on global citizenship, offshore tax planning, and new places to diversify.

YOU MAY ALSO LIKE

Get the Right Passport for You

We’ve helped our clients obtain 28 different country’s citizenships, from often-overlooked ancestry programs, to fast-tracked investment options, and even exclusive programs for HNWIs. Don’t limit yourself; let Nomad Capitalist’s unbiased approach help you find the best option.

What do you want to accomplish?

Let us know your goal and we will tell you how we can help you based on your details.

$

We handle your data according to our Privacy Policy. By entering your email address you grant us permission to send you the report and follow up emails later.