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Freedom • Global Citizen

How to Establish Tax Residency in Cyprus

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 will allow the individual to be 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.

Why Cyprus

Tax Residency in Cyprus

So, 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:
    • Do not spend more than 183 days a tax year in any other country.
    • Are not a tax resident anywhere else.
    • 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
    • Maintain in the tax year a permanent residential property in Cyprus which is either owned or rented by you.
Tax Residency in Cyprus.

Cyprus Tax Residency Application Process

Let us take you through 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.

Relax. There’s no need to fret or sweat about transferring all your business activities to Cyprus. In fact, we don’t recommend you transfer anything near a lion’s share if your current business structure is tax optimized.

However, we thought you might like to know that Cyprus has a mighty fine 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, again, we’re your go-to guys.

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, you next:

  • 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.

The process of becoming a tax resident is the same for EU and Non-EU citizens, but it is different when it comes to obtaining residency and work permits. In this case, EU citizens don’t need special permits, they can come and live in Cyprus as EU citizens, however, Non-EU citizens must obtain the relevant visa and permit.

An individual can obtain a tax certificate to show to other countries. This is obtainable from the Cyprus Tax Office following a relevant application, provided the taxable person is up to date with his /its tax obligations.

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.

One of the most common questions about tax in Cyprus is: Do foreigners pay tax in Cyprus? The answer is yes. But tax rates are lower. Which also provides the answer to another frequent query: Is Cyprus a tax haven?

But there are other tax havens. And there is even the argument that a tax haven isn’t necessarily a good thing anymore. What is most important is that we help you go where you’re treated best.

Where in the World Is Cyprus?

Do They Speak English in Cyprus

Is Cyprus Part of Europe or Asia?

Geographically, Cyprus forms part of Asia but belongs to Europe on a cultural and political level. Cyprus lies 100km west of Syria and 770km southeast of the Greek mainland.

Is Cyprus Greek or Turkish?

Cyprus is both Greek and Turkish. The Greek majority controls the south of the island and the Turkish minority, the north. Cyprus is 60km south of mainland Turkey.

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.

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