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How to Establish Tax Residency in Cyprus

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According to ancient Greek mythology, Aphrodite, the goddess of love and beauty, was born from the sea foam near a coastal town of Cyprus. 

Standing tall in the crystal-clear waters, the distinctive Aphrodite’s Rock seems to emit an ethereal aura. Swimming around the rock, just one of the many ancient treasures of Cyprus, is said to bring good luck in love.  

Despite its connection to its past, Cyprus is a forward-looking country. While the nation’s mysterious Aphrodite rock may grant visitors good fortune in romance, you won’t have to rely on luck to experience financial and personal success in Cyprus. Well-known for its favourable tax regime, Cyprus welcomes individuals seeking to establish tax residency and enjoy all the perks that come with it. 

Cyprus has no capital gains tax and no wealth or inheritance taxes. As wealthy individuals know, taxes steal a considerable amount of your annual income. If you hope to create a lifestyle favourable to your personal and financial growth, we are here to help you every step of the way. 

At Nomad Capitalist, we help entrepreneurs and investors with asset protection, tax planning, dual citizenship and global diversification with carefully formulated holistic strategies. While Cyprus may be the perfect choice for those seeking a low-tax country with a stable economy and society, it may not be suitable for everyone. Fear not; our team at Nomad Capitalist will craft the perfect program designed with your goals front and centre. Become a client today and start your journey to growth. 

Why Cyprus?

Cyprus has several appealing aspects that draw people from all over the globe, including its temperate climate, natural beauty and low crime rate.

In the past, at least, you could justify Western Europe’s high costs and taxes by appealing to the region’s relative stability and growing economies. But today, high costs and taxes seem less and less justified. Places like Cyprus offer wealthy people greater financial success, a warm welcome and low taxes. 

In Cyprus, there is no capital gains tax on assets other than immovable property located in the country. 

However, the main advantage of Cypriot Tax Residence is its non-domiciled tax regime for expats. In simple terms, non-domiciled Cyprus tax residence status means you’re exempt from being taxed on income from dividends, interest and rental income, regardless of where the income is sourced. 

To succeed in getting non-domicile status, you must prove that either you or your father was born in another country and that you plan to eventually return to that country. 

To be eligible, you must be a tax resident for at least 60 days during a tax year, carry out business activities, or be employed in a Cyprus tax resident company and have a permanent residence in Cyprus by either renting or owning a home.

Income from employment carried on out outside Cyprus is exempt from Cyprus income tax, provided that the employment exceeds 90 days per tax year. Proper business structuring is required to ensure it does not trigger unwanted Permanent Establishment or Controlled Foreign Company (CFC) tax implications. 

The most significant benefit of Cyprus’s Tax residence and non-domiciled taxation is that this regime is valid for 17 years. Non-dom tax status in Cyprus benefits those who get most of their income from dividends and capital gains. 

In addition, Cyprus has agreed to double taxation treaties with more than 60 countries to avoid double taxation.

Tax Residency in Cyprus

If Cyprus’s tax system sounds appealing, you may be wondering about the requirements for obtaining a tax status in the country. 

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 residents anywhere else
    3. Carry out any business in Cyprus
    4. You are employed in Cyprus or hold an office at a company (like being a business director)
    5. Maintain a permanent residential property in Cyprus that you own or rent in the tax year.

You must spend at least 60 days in Cyprus each year to renew your tax status. You also cannot spend 183 days or more in any other country to be counted as a tax resident of Cyprus. 

Cyprus Tax Residency Application Process

Cyprus has several pathways to residency. Below, we’ll provide the basic details for each program to help you decide which route is best. Although the process sounds complicated, you don’t have to go through it alone. Check out our services and let us handle the hard work for you.

1. Cyprus Tax Resident by Company Formation:

If you are unable to spend 183 days in Cyprus and the 60-day rule suits you better, then forming a company on the island 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-optimised.

In terms of forming a company, you’ll need to provide the following:

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

Once you have prepared these documents, the following 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 a minimum of €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, EU citizens are not required to obtain special permits to live in Cyprus, while non-EU citizens need to obtain the correct 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. 

Are you tired of shelling out a significant portion of your hard-earned income in yearly taxes? If you aspire to live in a Mediterranean paradise that offers enticing tax benefits, look no further than Cyprus. 

If you want to pursue citizenship, residency is a great way to start the process. The good news is that Cyprus recently updated its residency requirements for citizenship, meaning you now only need to wait four to five years rather than the previous seven. 

Our philosophy at Nomad Capitalist is that going where you are treated best can help you realise the best combination of tax planning, second residence, dual citizenship, and asset protection. Let us shape a holistic plan tailored to your needs. 

How to Become a Non Domiciled Resident in Cyprus

Tax Residency in Cyprus: FAQs

What are the 60-day 183-day rules?

Under the Cyprus Income Tax Law, there are only two ways to become Cypriot tax residents: the 60-day rule or the 183-day rule. A tax resident of Cyprus is an individual residing in the Republic for one or more periods totalling more than 183 days 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 exceeding 183 days in total
Is not considered tax resident by any other state for the same tax year
Carries out business in Cyprus, is employed in Cyprus 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
Arrival and departure from Cyprus on the same day count 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 your parents’ birth certificates. 
As a company director, you must pay 8.8% of your employer-based income to National Insurance. Additionally, your profits from a Cypriot company will be subject to the standard corporate tax rate of 12.5%, although start‐ups can pay less. But remember, we said that if you have a tax residence in Cyprus, your main operating business should be outside the country. 
Under the country’s income tax law, you are exempt from any income tax (provided you take dividends instead of salary) on the income you’ve earned working for a Cypriot company for 17 years.

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 Britain before becoming independent in 1960, and therefore, English is widely spoken. 

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