Cyprus – Tax Benefits for Expatriates and High Net Worth Individuals Relocating There

Why 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

An individual becomes a tax resident in Cyprus by spending more than 183 days in Cyprus in any one calendar year. With that being said, 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. An additional incentive has been implemented whereas individuals can become tax residents in Cyprus by spending a minimum of 60 days in Cyprus provided that certain criteria is met.

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

Income Tax Exemption for Taking up Employment in Cyprus

  • An exemption of 50% of the remuneration from employment is available for an individual in Cyprus who was resident outside Cyprus before the commencement of his/her employment in Cyprus. The exemption applies for a period of 10 years starting from the first year of employment in Cyprus, provided that the income from such employment exceeds €100,000 per year.

The Cyprus Action Plan for 2022 provides for tax exemptions that apply to foreign highly skilled employees in the Republic and are being extended to a maximum period of 17 years.

The existing 50% tax exemption is also being extended to cover new resident employees, with an annual employment salary of €55,000 or more.

The relevant legislation for the extended tax exemption is yet to be submitted and approved.

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.

Tax Advantages for Pension Lump Sums and Income

Any lump sum received as a retirement gratuity is exempt from tax.

A Cypriot tax resident individual 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

If you would like any additional information regarding the tax benefits available for expatriates and HNWI’s relocation to Cyprus, contact the Dixcart office in Cyprus: advice.cyprus@dixcart.com