What are the Advantages of Portugal’s Non-Habitual Resident Regime?

Background

Portugal’s Non-Habitual Resident Regime (NHR) attracts thousands of new residents to Portugal, by offering competitive tax rates, and in the right circumstances, full tax exemptions on certain foreign income, for ten years.

Visa Opportunities in Portugal

Portugal is an attractive and popular location. Not only is it undoubtedly a beautiful country, offering an attractive lifestyle and way of life, it also offers a temporary residence visa for digital nomads, which freelancers and entrepreneurs often take advantage of, and the popular Golden Visa and the Non-Habitual Resident (NHR) programme, which when combined together, offer an interesting route for individuals to move to Portugal and enjoy very agreeable tax advantages once they relocate.

Relevance of Golden Visa and the Non-habitual Residents Regime

Portugal’s Golden Visa is less important for EU citizens, as they already have the right to live in Portugal without formal immigration or investment requirements needing to be met, but the buzz and energy in Portugal has sparked interest amongst many.

Portugal is currently attracting the affluent, as well as a wide range of other individuals, through the favourable tax regime: the NHR, which is a major motivator for both EU and non-EU citizens. 

The Non-Habitual Resident Regime Explained

NHR lasts for 10 years and is available to EU and non-EU citizens who become tax resident in Portugal, provided they have not been resident in Portugal for the previous 5 years.

Individuals can enjoy non-habitual status, whereby income derived from employment or independent individual services, from a domestic (Portuguese) source, is taxed at a special flat rate of 20%, provided the income is from high value-added activities or are of a scientific, artistic, or technical nature.

A tax exemption may apply to income derived from a foreign source.

Criteria to Meet NHR Status

The following criteria must be met:

  • The right to reside in Portugal, either by being an EU/EEA/Swiss citizen, or through schemes such as the Golden Visa programme.
  • Must not have been resident in Portugal within the last five Portuguese tax years.
  • Must not have been a Portuguese tax resident in the five years prior to taking up residence in Portugal.
  • The individual must have a place to live in Portugal, this could be the rental of a modest apartment.
  • To apply for NHR, a fiscal representative, such as Dixcart, needs to be appointed in Portugal.

Additional Information

If you would like more information, and/or would like to instruct Dixcart to act as your fiscal representative, please get in touch today: advice.portugal@dixcart.com.

Cyprus – Attractive Lifestyle and Tax Benefits

Cyprus Lifestyle and Tax Benefits

Why choose Cyprus for relocation purposes?

Surrounded by the bright blue waters of the Mediterranean Sea, Cyprus has always been an enticing location for high-net-worth individuals considering relocation. It is a member of the EU and therefore well positioned for those who seek global mobility and ease of travel across Europe, as well as the Middle East and Africa.

English is widely spoken in Cyprus, having been part of the Roman Empire and a British colony for many years, however traditions run deep through the island’s villages, with each enjoying a variety of cultural influences to share with newcomers.

Cyprus has a Mediterranean climate. Whilst small, the island is an archaeological and natural haven, with stunning seaside villages and beaches. It is also home to a large community of expats who have relocated to Cyprus to enjoy the benefits that the island, and the tax regime offers.

Cyprus offers the following lifestyle benefits:

  • A Mediterranean lifestyle and peaceful, friendly community
  • A good work-life balance
  • Excellent transport links
  • A diverse range of amenities
  • Low cost of living
  • Excellent private and state healthcare sectors
  • A large expat community
  • A high quality of education, there is the option for private education (English curriculum) or public education, as well as several international Universities located on the island
  • Attractive tax benefits.

Cyprus Offers a Range of Interesting Tax Incentives for Individuals

Many high-net-worth individuals relocate to Cyprus due to its advantageous non-domicile tax regime, whereby individuals who were not previously tax resident can apply for non-domicile status.

Cypriot non-domiciles benefit from a zero rate of tax on; interest, dividends, and capital gains (apart from capital gains derived from the sale of immovable property in Cyprus), and capital sums received from pension, provident and insurance funds.

These zero tax benefits are enjoyed even if the income has a Cyprus source or is remitted to Cyprus. There are several other tax advantages, including a low rate of tax on foreign pensions, and there are no wealth or inheritance taxes in Cyprus.

Options for Relocating: Permanent Residence and Temporary Residence Permits

Individuals wishing to move to Cyprus can apply for a Permanent Residence Permit which is useful as a means to ease travel to EU countries and organise business activities in Europe.

Applicants must make an investment of at least €300,000 in one of the investment categories required under the programme, and prove they have an annual income of at least €30,000 (which can be from pensions, overseas employment, interest on fixed deposits, or rental income from abroad). If they choose to reside in Cyprus for seven years, in any ten-calendar year period, they may be eligible to apply for Cyprus citizenship by naturalisation.

Alternatively, a temporary residence permit can be obtained by establishing a foreign investment company (FIC). Through this kind of international company, work permits can be obtained for relevant employees, and residence permits for them and family members. Another key advantage is, again, that after residing for seven years in Cyprus, within any ten-calendar year period, third country nationals can apply for Cyprus citizenship.

Moving to Cyprus to take up Employment

It is common for high-net-worth individuals to relocate to Cyprus for employment purposes. If the Permanent Residence Permit is not the right route for you and/or your family, Cyprus offers several alternate ways to live and work in Cyprus:

  • Business Facilitation Unit: visas for highly skilled third country nationals – the Ministry of Finance announced in 2022, that they are introducing the Business Facilitation Unit to assist highly skilled third country employees with a minimum gross salary of €2,500 per month, to gain work permits in Cyprus. These permits will last up to three years.
  • Digital Nomad visa: non-EU nationals who are self-employed, salaried, or on a freelance basis can apply for the right to live and work in Cyprus remotely, for up to one year. The visa can be renewed for another two years.

Why Relocate to Cyprus for Work?

Personal taxation benefits:

  • A tax exemption, of 50% of employment income, is available to an individual employed in Cyprus who was resident outside of Cyprus before he/she commenced employment in Cyprus. The exemption applies for a period of seventeen years starting from the first year of employment in Cyprus, provided that employment income exceeds €55,000 per year.
  • Cyprus has more than 65 tax treaties that provide for zero or reduced withholding tax rates on; dividends, interest, royalties, and pensions received from abroad. In addition lump sums received as a retirement gratuity, are exempt from tax.
  • A Cypriot tax resident receiving pension income from abroad, can choose to be taxed at a flat rate of 5%, on amounts exceeding €3,420 per year.

Starting a Business in Cyprus as a Means of Relocation

The reputation of Cyprus as an international financial centre has grown significantly over recent years. Cyprus is an attractive jurisdiction for trading and holding companies and offers a number of tax incentives.

In order to encourage new businesses to the island, Cyprus offers two temporary visa routes as a means for individuals to live and work in Cyprus:

  • Establishing a Cyprus Foreign Investment Company (FIC): individuals can establish an international company which can employ non-EU nationals in Cyprus. Such a company can obtain work permits for relevant employees and residence permits for them and their family members. A key advantage is that after seven years, third country nationals can apply for Cyprus Citizenship.
  • Establishment of a small and medium sized Innovative Enterprise (Start-up visa): this scheme allows entrepreneurs (individuals or a team), from countries outside the EU and outside the EEA, to enter, reside and work in Cyprus in order to; establish, operate, and develop a start-up business. This visa is available for one year, with the option to renew for another year.

Corporate Tax Benefits:

  • Cypriot companies enjoy a 12.5% rate of tax on trading, and a zero rate of capital gains tax. In addition, Cyprus tax resident companies and Cyprus permanent establishments (PEs), of non-Cyprus tax resident companies, are entitled to a Notional Interest Deduction (NID), on the injection of new equity used to generate taxable income.
  • NID is deducted from taxable income. It cannot exceed 80% of the taxable income, as calculated prior to the Notional Interest Deduction, arising from the new equity. A company could achieve an effective tax rate as low as 2.50% (income tax rate 12.50% x 20%).

Get in Touch

For additional information about the attractive tax regime for individuals moving to  Cyprus, or information regarding relocating there, please contact: advice.cyprus@dixcart.com.

Movement of Millionaires During 2022

According to New World Wealth who compiled the data for the Henley Global Citizens Report, a projected 88,000 of the world’s millionaires will move to a new country by the end of the year.

High-net-worth individuals (HNWIs) with a net worth of over US$1 million are extremely mobile following the Covid-19 pandemic, as well as the current war in Ukraine which is having global repercussions. Due to the lockdown and travel restrictions from Covid-19, there are no specific reports for 2020 and 2021 but as restrictions have now eased, momentum is gaining as relocation has become front of mind for many of the ultra-rich.

It will come as no surprise that Russia and Ukraine are projected to see some of the biggest emigration numbers, by the end of 2022. Andrew Amoils, the head of research at New World Wealth stated in the report that “Russia [is] haemorrhaging millionaires […] Affluent individuals have been emigrating from Russia in steadily rising numbers every year over the past decade, an early warning sign of the current problems the country is facing”. Russia is projected to see 15% of their HNWIs moving (projected 15,000).

However, it is Ukraine that is expected to suffer the greatest loss of HNWIs as a proportion of its population – a huge 42% of its HNWIs, could leave by the end of 2022; a predicted net loss of 2,800 millionaires.

China and India are also predicted to see their millionaire populations relocate. General wealth growth in China has been slowly declining in the past few years, which could lead to China seeing its most damaging year yet.

India on the other hand is not so concerning. Predicted figures are suggesting that India will see approximately 8,000 HNWIs migrate during 2022, however there is also a suggestion that those who have relocated in the past, are returning. In the next few years, we would not be surprised if the HNWI population in India rises substantially, which will then make it one of the biggest growing wealth markets at that time.

The UAE

During 2022, the UAE is expected to draw in the largest inflow of HNWIs, with approximately 4,000 millionaires from; Russia, India, Africa, and the Middle East moving to the country. The UAE has been known as a ‘millionaire magnet’ for many years; it has a robust international business hub, sits at the top amongst the world’s most competitive tax systems, and offers a luxury lifestyle from education, leisure activities, shopping, and hospitality, to its top-end real estate sector. With the UAE predicted to surpass the US this year, the US is rapidly losing its appeal as a haven for the world’s wealthiest.

Australia

In second place sits Australia – approximately 3,500 HNWIs will move to Oz before the end of 2022 (and according to the New World Wealth, 80,000 millionaires have already relocated in the last two decades). It is one of the largest countries in the world, rich in natural resources and fertile land, and has a thriving economy.

Singapore

Singapore is a favoured location, mainly for the rest of Asia. Emerging as Asia’s top wealth management centre, this makes sense. A net inflow of approximately 2,800 HNWIs is expected to find a home in this prosperous country.

Israel

Israel sits closely behind, with large numbers of HNWIs from the UK, France and Russia set to move there; approximately 2,500 during the year.

Switzerland

But it is Switzerland we are keeping our eye on. Even though Switzerland is not part of the EU, it is within the Schengen area, and has always been an elite jurisdiction in which to settle down. Switzerland is projected to attract a net inflow of around 2,200 in 2022.

It has always featured amongst the top most attractive countries for high-net-worth individuals to live, being one of the world’s wealthiest countries and known for its impartiality and neutrality. In 2021 Geneva was listed as one of the wealthiest cities in the world with the total wealth held in the city amounting to US$875 billion.

Portugal

A consistent favourite, fuelled by the ‘Golden visa’ of Golden visas. Over the last decade, Portugal has seen HNWIs, wealthy entrepreneurs and ultra-rich investors from around the globe, predominantly from Turkey, South Africa, and South America, but also most recently from the US, relocate to its sunny shores. With the current hype around digital nomadism and the D7 visa, the younger generation of HNW families are setting up shop in Lisbon. An expected inflow of 1,300 HNWIs is expected in Portugal in 2022.

Greece

More and more HNWIs are relocating to Greece and applying for its Golden visa programme, with millionaires from Turkey, Russia, Ukraine, and China all favouriting the country. Greece is expected to see around 1,200 HNWIs apply in 2022. Dixcart has already seen interest, especially around the opportunities that are presented by obtaining a Greek residence permit but becoming tax resident in Cyprus and benefiting from the Cypriot non-dom tax regime.

Malta

Whilst just outside the top 10 list of countries gaining millionaires in 2022, Malta still has an important spot. Approximately 300 millionaires are expected to move to Malta in 2022, joining at least 2 billionaires already registered on the island.

In terms of wealth growth, the island currently has one of the fastest growing markets, with its strong economic performance in recent years being driven by its shift towards fast-growing services such as; finance, e-gaming and tourism, and its citizenship by naturalisation programme which has brought substantial new wealth to the island.

Summary

“Countries that draw wealthy individuals and families to migrate to their shores tend to be robust, with low crime rates, competitive tax rates, and attractive business opportunities,” Amoils has stated.

Dixcart Domiciles offers specialist advice regarding various residence programmes around the world. 

We can help you discover the different countries around the world that offer attractive residence and/or citizenship programmes and those that might suit you and your family best, and provide advice on a number of tax efficient solutions that might be available.

Get in touch

If you are considering relocating and would like to speak to an adviser to find out which programme and/or country best suits you and your family’s needs, please contact us: advice@dixcart-domiciles.com.

Reasons to Consider Relocating a Business to Cyprus

As an EU member state, Cyprus offers a pleasant climate, adequate infrastructure and a convenient geographical location. There are two main airports which provide frequent flights to most European cities as well as several international destinations. Cyprus has positioned itself well as a country of choice for both individuals and corporations, through the various tax incentives and benefits.

The numerous tax incentives offered has seen a steady flow of EU and non-EU nationals establishing their business operations in Cyprus. In addition, individuals find Cyprus a tax efficient location to structure their personal tax positions by taking advantage of flexible tax resident rules and the Non-domicile tax regime.

Cyprus is a common law jurisdiction and its justice system is based on the adversarial model. Cypriot law has been modelled on English common law.

Cyprus also has access to all EU directives as well as an extensive network of double tax treaties.

Corporate Tax Benefits

EU and non-EU nationals have the option to either establish a new company in Cyprus or migrate an existing business to Cyprus. English is widely spoken in Cyprus and staff can be easily sourced on the island. Most professionals have obtained their degrees from a UK university.

Once a company is established it can then access the tax incentives that are available.

The corporate tax rate in Cyprus is currently 12.5%, which is one of the lowest corporate tax rates in Europe. In addition, companies can apply the Notional Interest Deduction (NID) which can further reduce the overall corporate tax rate. NID was introduced in 2015, to reduce discrepancies in the tax treatment of equity financing compared to debt financing, and to promote an incentive for capital investment in Cyprus. NID is deductible, in the same manner as interest expenses, but it does not trigger any accounting entries as it is a ‘notional’ deduction.

Companies can also distribute dividends free of withholding tax. Dividends are, however, subject to contributions to the General Health System (GHS) at the rate of 2.65%, although there is a maximum cap of €180,000.  

 Summary of Corporate Tax in Cyprus

The following sources of income are exempt from corporate income tax:

  • Dividend income;
  • Interest income, excluding income arising in the ordinary course of business, which is subject to corporation tax;
  • Foreign exchange gains (FX), with the exception of FX gains arising from trading in foreign currencies and related derivatives;
  • Gains arising from the disposal of securities.

Personal Taxation

  • Tax Residence in 183 days

If an individual becomes tax resident in Cyprus by spending more than 183 days in Cyprus in any one calendar year, they will be taxed on income arising in Cyprus and also on foreign source income. Any foreign taxes paid can be credited against the personal income tax liability in Cyprus.

  • Tax Residence under the 60 Day Tax Rule

An additional scheme has been implemented whereby individuals can become tax resident in Cyprus by spending a minimum of 60 days in Cyprus, provided that certain criteria are met.

  • Non-Domicile Tax Regime

Individuals who were not previously tax resident can also apply for non-domicile status. Individuals who qualify under the non-Domicile Regime are exempt from tax on; interest*, dividends*, capital gains* (apart from capital gains derived from the sale of immovable property in Cyprus), and capital sums received from pension, provident and insurance funds. In addition, there is no wealth and no inheritance tax in Cyprus.

*subject to contributions to the General Health System at the rate of 2.65%.

Salary Income in Cyprus

On the 26th of July 2022 the long-anticipated tax incentives for individuals have been implemented. As per the new provisions of the income tax legislation, a 50% exemption for income in relation to first employment in Cyprus is now available for individuals with annual remuneration in excess of EUR 55.000 (previous threshold EUR 100.000). This exemption will be available for a period of 17 years.

Additional Information

If you would like additional information about Cyprus residency and business relocation to Cyprus, please contact: Robert Homem at the Dixcart office in Cyprus: advice.cyprus@dixcart.com.

Cyprus

An EU Solution for Individuals Seeking to Optimise Their Tax Exposure

Background

Cyprus has uniquely positioned itself as a tax jurisdiction of choice for individuals. Various positive aspects of Cyprus Income tax legislation are available to individuals seeking a flexible and attractive tax regime.

What makes Cyprus a jurisdiction of choice for individuals is the Non-domicile tax Regime which allows qualifying individuals to receive dividend and interest income exempt of income tax.  In addition individuals relocating to the island for the first time can benefit from reduced taxation on their employment income.

Day traders or individuals holding and managing their own investment portfolio can benefit extensively from the exemption of capital gains on the sale of equities.

The 60 day tax rule lends itself well for highly mobile individuals who travel extensively for work purposes and are not tied to one particular place of residence.

The tax benefits are further extended to individuals looking for a place to retire to.

Income Tax Reduction on Employment Income

On the 26th of July 2022 the long-anticipated tax incentives for individuals have been implemented. As per the new provisions of the income tax legislation, a 50% exemption for income in relation to first employment in Cyprus is now available for individuals with annual remuneration in excess of EUR 55.000 (previous threshold EUR 100.000). This exemption will be available for a period of 17 years.

Cyprus Tax Residency in 60 Days

An individual can become Cyprus tax resident in 60 days. This rule is applicable to individuals who do not spend more than 183 days in Cyprus or in any other jurisdiction.

The “60 day rule” applies to individuals who in the relevant tax year reside in Cyprus for at least 60 days, operate/run a business in Cyprus and/or are employed in Cyprus and/or are a director of a company which is tax resident in Cyprus.

Individuals must also have a residential property in Cyprus which they own or rent and not be tax resident in any other country. The individual must not reside in any other single country for a period exceeding 183 days in aggregate.

Non-domicile Status

Individuals can acquire Cyprus tax residency after having complied with spending either 183 days or 60 days in Cyprus. Please contact the Dixcart office in Cyprus for further details about these two alternatives: advice.cyprus@dixcart.com

The Non-domicile tax regime is particularly interesting for individuals whose main source of income is either dividend income or Interest Income. In addition individuals can take advantage of the exemption of taxation on capital gains.

UK nationals and Other Non-EU Resident Applicants

Due to Brexit, UK nationals are now considered as non-EU nationals and therefore need to follow the same application procedure as other non-EU nationals:

Non-EU nationals and the Permanent Residence through Investment Programme

In order to acquire a permanent residence permit the non-EU national needs to make an investment of at least €300,000, (excluding VAT) in one of the following investment categories: residential real estate, other types of real estate such as offices, shops, hotels or investment in the share capital of a Cyprus company, or in units of a Cyprus Investment Organization of Collective Investments (type AIF, AIFLNP, RAIF). In addition, evidence of a secure annual income of at least €30,000 must be provided. This required annual income, increases by €5,000 for every dependant person, and by €8,000 for every dependant parent or parent-in-law.

  • Non-EU Nationals and Temporary Residence through a Foreign Interest Company

A Foreign Interest Company is an international company, which, subject to meeting specific criteria, can employ non-EU national employees in Cyprus.

This programme enables employees and their families to gain residence and work permits under favourable terms. The main requirements enabling an international company to qualify as a Foreign Interest Company are; all third country shareholder(s) must own more than 50% of the total share capital of the company, and there  must be a minimum investment of €170,860 into Cyprus by these third country shareholder(s). This investment can be used at a later date, to fund future expenses incurred by the company when it is established in Cyprus.

  • Temporary residence on a visitor basis without the right to undertake any form of employment

Non-EU nationals can acquire a temporary residence permit based on a visitor visa, which can be renewed for a period of up to 10 years.

This type of residence does not allow the undertaking of any form of employment.

This basis of residence is most suitable for pensioners wishing to establish themselves in Cyprus and enjoy the advantageous tax regime applicable to foreign pensions. Please contact the Dixcart office in Cyprus for more details: advice.cyprus@dixcart.com.

Additional Information

For additional information about the attractive tax regime for individuals in Cyprus, please contact: Robert Homem at  the Dixcart office in Cyprus: advice.cyprus@dixcart.com.

Tax Benefits For Expatriates and High Net Worth Individuals Relocating to Cyprus

Why Move to Cyprus?

Cyprus is an appealing European jurisdiction, located in the eastern Mediterranean Sea and offering a warm climate and attractive beaches. Situated off the southern coast of Turkey, Cyprus is accessible from Europe, Asia, and Africa. Nicosia is the centrally located capital of the Republic of Cyprus. The official language is Greek, with English also being widely spoken.

Cyprus offers a palette of personal tax incentives for expatriates and high net worth individuals relocating to Cyprus.

Personal Taxation

  • Tax Residence in 183 days

If an individual becomes tax resident in Cyprus by spending more than 183 days in Cyprus in any one calendar year, they will be taxed on income arising in Cyprus and also on foreign source income. Any foreign taxes paid can be credited against the personal income tax liability in Cyprus.

  • Tax Residence under the 60 Day Tax Rule

An additional scheme has been implemented whereby individuals can become tax resident in Cyprus by spending a minimum of 60 days in Cyprus, provided that certain criteria are met.

  • Non-Domicile Tax Regime

Individuals who were not previously tax resident can also apply for non-domicile status. Individuals who qualify under the Non-Domicile Regime are exempt from tax on; interest*, dividends*, capital gains* (apart from capital gains derived from the sale of immovable property in Cyprus), and capital sums received from pension, provident and insurance funds. In addition, there is no wealth and no inheritance tax in Cyprus.

*subject to contributions to the national health system at the rate of 2.65%

Income Tax Exemption: Moving to Cyprus to Take up Employment

On the 26th of July 2022 the long-anticipated tax incentives for individuals have been implemented. As per the new provisions of the income tax legislation, a 50% exemption for income in relation to first employment in Cyprus is now available for individuals with annual remuneration in excess of EUR 55.000 (previous threshold EUR 100.000). This exemption will be available for a period of 17 years.

Nil/Reduced Withholding Tax on Income Received from Abroad

Cyprus has more than 65 tax treaties that provide for nil or reduced withholding tax rates on; dividends, interest, royalties, and pensions received from abroad.

Lump sums received as a retirement gratuity are exempt from tax.

In addition, a Cypriot tax resident, receiving pension income from abroad may choose to be taxed at a flat rate of 5%, on amounts exceeding €3,420 per year.

Additional Information

For additional information about the attractive tax regime for individuals in Cyprus, please contact Robert Homem or Charalambos Pittas at the Dixcart office in Cyprus: advice.cyprus@dixcart.com.

Cyprus

Making Cyprus Even More Attractive – Proposed Initiatives for 2022

In October 2021, the Cyprus Government announced an ‘action plan’ to attract additional companies to operate and/or expand their activities in Cyprus.

The action plan is certainly forward-looking and innovative in terms of the further measures to be introduced, to attract companies and individuals to move to Cyprus.

Timing

The action plan will be implemented from January 1st 2022, except where new legislation is required, as in the case of the three points below. The aim is for the relevant legislation to be submitted to the House of Representatives by the end of December, and to be approved in the first quarter of 2022.

  • Extension of the tax exemption that applies to employees in the Republic.
  • Increased tax deduction (in addition to the existing one) for research and development expenses.
  • Application to gain Cypriot citizenship, after having spent five of the previous ten years in Cyprus.

1.Business Facilitation Unit: Visas for Highly Skilled Third Country Nationals

The Ministry of Finance announced the introduction of the Business Facilitation Unit that will assist highly skilled third country employees, with a minimum gross salary of €2,500 per month, to gain work permits. Such individuals are required to present a university degree, or equivalent qualification, or certificate.

The maximum quota of work permits for third-country nationals per company, is set at 70% of all employees, over a period of five years. Permits will be issued within one month of application and will last up to three years. The spouses of such employees will also have access to the country’s labour market.

2.Digital Nomad Visa

Eligibility

Via the Digital Nomad Visa Programme, non-EU nationals active as self-employed, salaried or on a freelance basis can apply for the right to live and work in Cyprus. Applicants must work remotely using information technology and communicate remotely with clients and employers outside Cyprus.

Residence status

A Digital Nomad has the right to stay in Cyprus for a period of up to one year, with the right to renew for another two years. If they reside in the Republic for a period that in total exceeds 183 days within the same tax year, they are then considered tax resident in Cyprus.

During the stay in Cyprus, the spouse or partner of the Digital Nomad and any minor family members are not allowed to undertake dependent work or to engage in any kind of paid activity in the country.

Digital Nomads must have; salaries of at least €3,500 per month, medical coverage, and a clean criminal record from their country of residence.

3.Extension of the tax exemption that applies to foreign employees in the Republic and reduction of the threshold

There is a tax exemption of 50% to new and existing employees relocating/relocated to Cyprus (with the requirement that they were not Cyprus residents during the previous 10 years) with employment remuneration of €55.000 and above.

The exemption is valid for a period of 17 years from the year of employment.

4.Increased tax deduction for research and development expenses

Research and development expenses will be subject to an increased discount.

Eligible research and development expenses will be deducted from taxable income equivalent to 120% of the actual expenditure.

Please note that the relevant legislation is still to be submitted and approved.

5.Application for acquisition of Cypriot citizenship

The option will be available to apply for Cypriot citizenship after a period of five years of residence and work in the Republic of Cyprus, instead of the seven years that was applicable before.

Please note that the relevant legislation is still to be submitted and approved.

Additional Information

For additional information about the attractive tax regime for individuals in Cyprus, please contact Robert Homem or Charalambos Pittas at the Dixcart office in Cyprus: advice.cyprus@dixcart.com.

What Are The Main Benefits Offered By The Cyprus Non-Dom Regime?

Cyprus offers; a warm climate, good infrastructure, convenient geographic location, membership of the EU, tax advantages for companies and incentives for individuals through the Cyprus non-dom regime.

Background

A tax law, approved by the Cyprus House of Representatives in 2015, provides significant benefits to individuals and to companies, relocating to Cyprus.

The Main Benefits

The main benefits of the legislation, in relation to individuals, include:

  • Special Defence Tax exemption for Cypriot non-domiciled tax residents;
  • Extension of the personal income tax reduction relating to the salaries of new residents.

Tax Exemptions Enjoyed by Tax Residents of Cyprus Who Qualify under the Non- domicile Tax Regime in Cyprus

As a result of previous tax legislation and the exemption from the Cyprus Special Contribution for Defence Tax (“SDC”) introduced in July 2015, non-domiciliaries are exempt from taxation in Cyprus on the following sources of income:

  • Interest;
  • Dividends;
  • Capital gains (other than on the sale of immoveable property in Cyprus);
  • Capital sums received from pensions, provident and insurance funds.

Capital Sums Remitted to Cyprus are Not Subject to Taxation

The tax benefits detailed above, are enjoyed even if the income has a Cyprus source or if it is remitted to Cyprus.

In addition there are NO wealth and NO inheritance taxes in Cyprus.

Other Beneficial Features of the Cyprus Tax System for Individuals

Income Tax Reduction for New Residents in Cyprus

On the 26th of July 2022 the long-anticipated tax incentives for individuals have been implemented. As per the new provisions of the income tax legislation, a 50% exemption for income in relation to first employment in Cyprus is now available for individuals with annual remuneration in excess of EUR 55.000 (previous threshold EUR 100.000). This exemption will be available for a period of 17 years.

Low Tax Rate: Foreign Pensions

The first €3,420 of a pension from employment outside Cyprus is tax free, and individuals can elect to pay only 5% income tax on pension income in excess of this amount.

Cyprus’ Standard Income Tax Rates are:

  • €0 to €19,500: 0%;
  • €19,501to €28,000: 20%;
  • €28,001to €36,300: 25%;
  • €36,301to €60,000: 30%;
  • Greater than €60,000: 35%;

The Definition of Residence and Non-Domicile in Cyprus for “SDC” Purposes

An individual is considered as tax resident in Cyprus if they spend more than 183 days in any one calendar year there. Prior to the introduction of the Non-domicile tax regime, income received by Cyprus tax residents from dividends, rent and interest, was subject to the Special Contribution for Defence Tax (SDC).

This is why the introduction of the “non-domicile” tax status was so important. The law of July 2015 specifies that tax resident individuals, who are non-Cyprus domiciled, are completely exempt from SDC irrespective of where their income is generated or remitted from.

  • The Cyprus non-domicile tax regime is therefore particularly interesting for individuals whose main source of income is either dividend or interest income. In addition, individuals can take advantage of the exemption from taxation on capital gains.

The Definition of Domiciled in Cyprus

 The term “domiciled in Cyprus” is defined by law as an individual who has a Cypriot domicile of origin, in accordance with the Wills and Succession Law, which is the domicile of his/her father at the time of his/her birth. Or alternatively, an individual who is considered a Cyprus tax resident, as per the Income Tax Law, for a period of at least 17 years out of the last 20 years before the relevant tax year, irrespective of his/her domicile of origin.

Summary

Non-domicile status in Cyprus offers a number of tax related benefits.

The regime, introduced in July 2015, offers additional financial incentives for individuals to consider Cyprus as an attractive destination for tax residence, and these incentives continue to be in place.

Additional Information

For further information about the attractive tax regime for individuals in Cyprus, please contact Robert Homem or Charalambos Pittas at the Dixcart office in Cyprus: advice.cyprus@dixcart.com.

Cyprus

Several Reasons To Take Advantage Of The Cyprus Non-Domicile Tax Regime

Why Cyprus?

Cyprus is an attractive option for individuals who are considering a change of their tax residency.

This island offers; a warm climate, good infrastructure, convenient geographic location, membership of the EU, tax advantages for companies and incentives for individuals through the Cyprus non-domicile regime.

Main Benefits of Legislation Passed in 2015

A change in the tax legislation took effect on the on 16 July 2015

Among the approved changes in Tax Legislation, individuals qualifying under the Non-Domicile tax regime are exempt from the ‘Special Defence Tax’ (SDC).

SDC taxation is a taxation levied on individuals when receiving certain sources of income. Through the SDC exemptions granted, Individuals qualifying under the Non-domicile Tax regime are now exempt from taxation on the following sources of Income:

  • Interest; and
  • Dividends; and
  • Capital gains (other than on the sale of immoveable property in Cyprus); and
  • Capital sums received from pensions, provident and insurance funds; and
  • Capital sums remitted to Cyprus

All of the tax benefits detailed above are enjoyed even if the income has a Cyprus source and/or if it is remitted to Cyprus.

In addition there are: NO wealth and NO inheritance taxes in Cyprus.

Other Beneficial Features of the Cyprus Tax System for Individuals

  • Income Tax Reduction for New Residents in Cyprus

Individuals who were not previously resident in Cyprus, take up residence in Cyprus for work purposes, and earn over €55,000 per annum, are entitled to the following tax benefit:

  • 50% of employment income earned in Cyprus is exempt from income tax for a period of 17 years.

For reference, Cyprus’ standard income tax rates are:

  • €0 to €19,500: 0%
  • €19,501to €28,000: 20%
  • €28,001to €36,300: 25%
  • €36,301to €60,000: 30%
  • Greater than €60,000: 35%
  • Low Tax Rate: Foreign Pensions

The first €3,420 of a pension, from employment outside Cyprus, is tax free and individuals can elect to pay only 5% income tax on pension income in excess of this amount.

The Definition of Tax Residence and Non-Domicile Status

An Individual is considered tax resident, if they spend more than 183 days in Cyprus in any one calendar year. Under certain criteria individuals can become tax resident in Cyprus in 60 days.

Definition of Non-Domiciled Individuals

In accordance with the provisions of the Wills and Succession Law, there are two kinds of domicile:

  • domicile of origin; i.e. the domicile received at birth (generally dependent on the father’s side), or
  • domicile of choice; i.e. domicile acquired by establishing physical presence in a particular place and by demonstrating sufficient intention to make it the place of permanent residence

Regardless of the domicile of origin or choice, individuals who have been tax residents in Cyprus for at least 17 out of the last 20 years prior to the tax year in question, will be deemed to be domiciled in Cyprus for the purposes of the SDC Tax.

In any event, an individual who has spent 17 of the past 20 years, prior to the relevant tax year, as a Cyprus tax resident will be considered domiciled in Cyprus.

Summary

Non-domicile status in Cyprus offers a number of tax related benefits to individuals who are tax resident in Cyprus. The regime introduced in July 2015 offers an enhanced range of financial incentives for individuals to consider Cyprus as an attractive destination for their tax residence.

Additional Information

For further information about the attractive tax regime for individuals in Cyprus, please contact Robert Homem or Charalambos Pittas at the Dixcart office in Cyprus: advice.cyprus@dixcart.com.

Frequently Asked Questions – Moving to and Living in Switzerland

Switzerland is a very attractive location to live and work for many non-Swiss nationals. It offers amazing scenery as well as a number of world-famous cities such as; Berne, Geneva, Lausanne, and Zurich. It also offers an attractive tax regime for individuals as well as for companies, in the right circumstances.

We interview Thierry Groppi in our Dixcart office in Switzerland, on what it is like moving to Switzerland and living there. Thierry is the Business Development Manager in our Dixcart Office in Switzerland.

How long can individuals stay in Switzerland as a tourist?

I am often asked this question.

Non-Swiss nationals are allowed to stay in Switzerland as tourists, without registration, for up to three months. After three months, if they are planning to stay in Switzerland, they must obtain a work and/or residence permit, and formally register with the Swiss authorities.

What is the situation regarding working in Switzerland?

There are three ways to be entitled to work in Switzerland:

  • Being hired by an existing Swiss company.
  • Forming a Swiss company and become a director or an employee of the company.
  • Investing in a Swiss company and become a director or an employee of the company.

When applying for Swiss work and/or residence permits, it is important to note that different regulations apply to EU and EFTA nationals compared to other nationals, so it is worth checking.

The most popular route is definitely individuals forming a company in Switzerland. This is because EU/EFTA and non-EU/EFTA nationals can form a company, be employed by it, reside in Switzerland, and benefit from the attractive tax regime.

What is the minimum investment required for Swiss residency, when forming a company by a Non-EU/EFTA citizen?

The company must present a business plan detailing how the amount to be invested in it will generate a turnover of CHF 1 million or more per annum, in the ‘near future’, and the business plan has to show that the company will achieve this turnover in a specified number of months, not necessarily in the first year (particularly if the company is a start-up).

Can individuals gain Swiss residency through investment in real estate?

No, Switzerland does not offer a real estate investment programme.

Non-Swiss nationals can only gain Swiss residency through the ‘Swiss Business Investment Programme’, detailed above or through the Swiss Lump Sum System of Taxation.

Swiss based real estate can be purchased after gaining a residence permit. Quotas may be applicable to non-Swiss nationals in relation to owning a second residence in Switzerland.

What is Swiss Lump Sum Taxation?

The Swiss Lump Sum System of Taxation is extremely popular. This annual tax is based on the applicant’s ‘expenses’ (not income), which is generally calculated as being 7 times the applicant’s annual rent.

A tax rate is then applied to the individual’s expenses and depends on the canton. The tax rate is generally between 21% and 46%, as agreed with the relevant cantonal tax authority.

Minimum deemed expenses, are detailed by many cantons, some of which are listed below:

  • Aargau – CHF 400,000
  • Bern – CHF 400,000
  • Geneva – CHF 600,000
  • Fribourg – CHF 250,000
  • Lucerne – CHF 600,000
  • Ticino – CHF 400,000
  • Schwyz – CHF 600,000
  • St Gallen – CHF 600,000
  • Uri – CHF 400,000

What are some of the advantages of living in Switzerland?

There are so many advantages of living in Switzerland.

It has, and continues to be, one of the most sought-after countries to live in, in the world. It is a safe and neutral country, it has high standards of living and education, there are a variety of multicultural cities, and it is an all-round beautiful country with pristine lakes and the backdrop of the Alps.

It is also excellent for businesses. Business is investment friendly in Switzerland, and there is a great banking system.

How can an individual become a Swiss Citizen?

An EU or non-EU/EFTA national must have lived at least 10 years in Switzerland to be able to apply for a Swiss passport.

However, if an EU or non-EU/EFTA national is the spouse of a Swiss national, they need only to have lived in Switzerland for 5 years.

A child of a Swiss national (under the age of 18) will automatically be granted Swiss nationality. 

What reputation does a Swiss passport have?

A Swiss passport is very well respected across the world. It is well ranked in the world passport rankings in terms of visa free travel, with Swiss citizens able to travel, visa free, to 172 countries.

Which cities are well-known and popular to live in?

Geneva, Zurich, Bern, Lausanne, Basel, Lucerne, and Lugano are some of the most well-known cities in Switzerland, and are definitely the most popular in terms of where people live after relocating to Switzerland.

What languages are widely spoken in Switzerland?

English is spoken everywhere, as well as the three national languages of: French, German and Italian.

Is Switzerland in Schengen?

Yes, Switzerland is a Schengen signatory, enabling free movement for Swiss nationals within the EU. A Swiss residence card also allows for free movements in Schengen countries.

Does Switzerland have tax treaties?

Yes, Switzerland has a large number of tax treaties, just over 100 in total.

Additional Information

For additional questions about how to relocate to Switzerland, or what it is like to live and work in Switzerland, please get in touch: advice.switzerland@dixcart.com.