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.
- 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.