Cyprus Tax Residency

Despite common misconceptions, Cyprus is not considered an offshore jurisdiction; instead, it is a low-tax jurisdiction that fully complies with the laws and directives of the European Union, OECD, and international standards.

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Benefits of Cyprus Tax Residency

Double Taxation Avoidance

Cyprus has secured over 60 double taxation avoidance agreements, ensuring your international income remails protected against dual taxation.

Low Personal Cost

Benefit from exceptionally low income tax and social contributions, among the least burdensome within the European Union.

Competitive Corporate Tax

With a corporate tax rate of just 12.5%, Cyprus offers one of the lowest rates in the EU, enhancing profitability and investment appeal.

Income Tax Exemption

Individuals earning up to €19,500 annually enjoy a 0% income tax rate, promoting financial relief and greater disposable income.

Benefits for Non-Domiciles

Cyprus offers significant tax advantages to non-domiciled tax residents, optimizing tax efficiency and personal wealth management.

Attractive IP Box Regime

The Cypriot IP Box Regime allows 80% of qualifying profits from intellectual property to be exempt from taxation, significantly boosting returns on innovation.

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How to become a Cyprus Tax Resident

Spend a minimum of 60 days in Cyprus during the relevant tax year

Not spend over 183 days in any other single country

Not be a tax resident in any other country

Engage in business, employment, or hold a directorship in a Cyprus tax resident company during a tax year

Have a permanent home in Cyprus

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Understanding Cyprus Tax Residency for Individuals and Non-Domiciled Status

Imposition of Tax

Tax Residency

Calculation of Days

Non-Domiciled Individuals

Tax Benefits of Non-Domiciled Persons

Other Tax Advantages

A Cyprus tax resident is taxed on income accruing or arising from sources both within and outside the Republic of Cyprus, whereas a non-Tax resident of Cyprus is only taxed on income accruing or arising from sources within the Republic. 

Cyprus taxation scheme is based on the principle of residence and there are two main rules someone can choose to become a Cyprus Tax resident. 

A. The 183-day rule

An individual is considered a tax resident of Cyprus if he spends more than 183 days in the Republic in a tax year (1st of January to 31st of December). Consequently, if the individual is physically present in Cyprus for less than 183 days in a tax year, he will be considered to be a non-Cyprus tax resident in that tax year. 

B. The 60 days rule

As of 1st January 2017, an individual can be considered as a tax resident of the Republic even if he spends less than 183 days provide, he meets all of the following conditions within the same tax year (1st of January to 31st of December):

If during the year the business, employment or holding of an office is terminated, then the individual shall not be treated as a Cyprus tax resident for that tax year. 

To calculate the days of presence in Cyprus 

  1. The day of arrival in Cyprus is deemed to be a day in the Republic
  2. The day of departure from Cyprus is deemed to be a day outside of the Republic 
  3. The arrival into the Republic and departure from the Republic on the same day is considered as a day in the Republic 
  4. The departure from the Republic and the arrival in the Republic on the same day is considered as a day out of the Republic

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 by an individual at birth; or
  • Domicile of choice:  i.e. the domicile acquired by an individual by establishing physical presence in a particular place with the intention to make it the place of permanent residence

Irrespective 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 Law.

In the case of persons who have their domicile of origin in Cyprus, they will nevertheless be considered as non-domicile in the following cases:

  • If they have acquired and maintained a domicile of choice outside Cyprus, provided that they were not tax residents in Cyprus for any continuous period of at least 20 consecutive years prior to the tax year in question; or
  • If they were not tax residents in Cyprus for a period of at least 20 consecutive years immediately prior to the entry into force of the non-domicile provisions (i.e prior to 16/07/2015).

As per the provisions of the Cyprus SDC Law, dividends and bank deposit interest earned by individuals who are tax residents in Cyprus are subject to SDC tax at the rate of 17% and 30% respectively, regardless of the source of the income (i.e. from Cyprus or from abroad).

SDC tax applies only for individuals who are both Cypriot tax residents and domiciled in Cyprus.

Therefore, non-domiciled tax residents will be completely tax exempt from any dividends and interest received in Cyprus (except for minimal GeSY contributions).

Since 1 March 2019, Dividend income is subject to GeSY contributions, (at the rate of 1.7% from 1 March 2019 until the 29 February 2020, then increased to 2.65% from March 1, 2020), restricted to a maximum of EUR180,000 income annually.

Furthermore, irrespective of domicility, foreigners who become Cypriot tax residents enjoy a range of other significant income tax advantages with the main ones being the following:

  1. Interest and dividends are liable to SDC instead of income tax, but non-Cyprus domiciles are exempt (except for minimal GeSY contributions).
  2. Profit from sale of shares and other qualifying titles is specifically exempt from Cyprus taxation, provided that the underlying assets do not include immovable property located in Cyprus.
  3. First €19,500 of taxable income is tax exempt. Any taxable personal income in excess of this amount is taxed at progressive rates ranging from 20% to 35% (for incomes over €60,000).
  4. 50% exemption for remuneration from employment exercised in Cyprus by persons who were resident outside Cyprus before commencement of their employment. The exemption applies for a period of 10 years commencing from the year of employment, if such income exceeds €100,000 per year.
  5. In case of Cypriot remuneration, which is less than €100,000, a 20% exemption is granted or €8,550 – whichever is lower. For employment commencing between 2012 and 2025, the exemption applies for a period of 5 years starting from the tax year following the year of employment.
  6. 100% exemption on remuneration from the rendering of salaried services outside Cyprus to a non-resident employer or a permanent establishment outside the Republic of a resident employer, for an aggregate period in the year of assessment of more than 90 days. 
  7. In case of Cypriot immovable property acquired up to 31st December 2016, profit from subsequent future disposal of such property will be exempt from the 20% Capital Gains Tax.
  8. Pension received in respect of past employment abroad is taxed in Cyprus at the flat rate of 5% for amounts exceeding €3,420 per year.
  9. No inheritance tax, no wealth tax, no gift taxation.
  10. In case of individuals who are beneficiaries to a Trust, such individuals would be exempt from tax in Cyprus, to the extent that the income at/from the Trust would be in the form of interest or dividends.
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What our Clients Say About Us

The team is always extremely helpful, responsive, and is happy to provide ongoing support with all possible questions and issues that might arise. They really give the feeling of caring about the clients and their interests, and I would highly recommend them for any legal support you might need in Cyprus.

A big thank you to the whole team!

MICHAEL BENKOVICH

– Data Analyst

I would like to express my sincere and heartfelt appreciation and gratitude for your highly professional and competent services at Polycarpos, provided in both a friendly and accessible manner. Penny took our complex case on board and made the impossible possible for us.

I have no reservation in highly recommending your firm, thank you!

SINEAD LEAHY

– Information Architect

I have the pleasure of working with Stelios and his team at the accounting and audit services for my Cyprus Ltd already for several months.

What truly sets Stelios apart is his unwavering availability and responsiveness. He is always there for me, ready to address any questions or concerns I have, no matter how big or small. 

CHRISTIAN SCHUSTER

– Data Analyst

Professional team dealing with every legal aspect of relocation to Cyprus:
– Immigration registration
– Company setup
– Bank account opening
– Company financial reports,
– Etc.
I used many of their services. Responses are fast, accurate and clear.

DAVID LEVY

– Company Director

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Frequently Asked Questions

– As an individual
– Through a company
– Through a trust
– Through a limited or unlimited partnership
– A combination of all of the above

There is no generally accepted definition of a joint venture in the law. A joint venture is a term describing a relationship between two or more parties who invest together in a business endeavor. The joint venture can take various forms, the most common of which are the following:

– A partnership joint venture
This has the advantage that there is certainty on provisions of partnership law, and in limited liability partnership joint ventures, the partners can have an unlimited liability partner while the others have limited liability. The disadvantages of this are tax, difficulty in organizing an exit strategy and difficulties in raising finance.

– A corporate joint venture
In a corporate joint venture, the parties form a new company to conduct the business. They enter in a shareholders’ agreement and may modify or use modified articles of association (the company’s constitutional document) to reflect their agreement. The advantages of a corporate joint venture are a certainty, limited liability, tax, and versatility (e.g. by using different classes of shares). The disadvantages are the formal requirements (some of them being rigid) and the statutory obligations for filing annual reports, audited accounts, paying the annual companies registrar levy.

Yes, Cyprus has an extensive network of treaties on the avoidance of double taxation.

This depends on your goals. A Cyprus International Trust is typically used in estate and international tax planning and asset protection. A company is typically used to conduct business or to accumulate the dividends from businesses abroad. Sometimes both may be used.

A shareholders’ agreement will regulate the relationship between the shareholders. It may provide for different rules than the default rules in the law, such as both shareholders approving significant transactions, each shareholder having the right to appoint a director on the board. On many occasions the articles of association of the company may also have to change but this depends on each specific case.

Yes, you can do this. Contact us for more information.

Banks need to establish the personal and economic profile of the beneficiary of a company or the person opening a personal account or being the beneficiary in a client’s account. They need to consider the information in order to verify that the money being brought to Cyprus do not derive from illegal activities. For more information, you can request to send you our banking guide.

Yes, we can offer, or recommend a third party if you would prefer, to offer accounting and VAT services and direct you to independent professionals for the accounting and auditing services required.

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Register company in Cyprus

A simple guide for registering a company in Cyprus

Companies in Cyprus are typically used as parent companies and trading companies whether the trading occurs abroad or in Cyprus.

Taking advantage of the extensive double tax treaties, Cyprus companies may provide significant tax benefits for businesses.

Trademark Registration Cyprus

Understanding Trademark Registration in Cyprus

A Trademark is an Intellectual Property Right that includes logos, signs, shapes, symbols, graphics, names or letters which identifies the products or services rendered by a company and differentiates them from the products or services of the company’s competitors.

Cyprus Tax Regime

Gain Valuable Insights on the Cyprus Tax Regime

Cyprus has one of the most attractive tax regimes in Europe with taxation highlights of 12.5% corporate tax or 2.5% for qualified Intellectual Property profits.

This guide provides general information on the personal and corporate taxation in Cyprus.

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About the Firm

Greg Small cyprus

Gregoris Philippou

PARTNER

Eleni 2 Small cyprus

Eleni Philippou

PARTNER

Ioannis Small 1 cyprus

Ioannis Pitsillos

SENIOR ASSOCIATE

Sergios Small 1 cyprus

Sergios Charalambous

ASSOCIATE

Clio Small cyprus

Cleo Antoniadou

CORPORATE ADMIN

Despina sMALL cyprus

Despina Charalambous

TRAINEE LAWYER

Stelios sMALL cyprus

Stelios Filippou

ACCOUNTS

Alaa Small cyprus

Alaa Chehade

ADMIN

Nikoleta Spyrou

Nikoleta Spyrou

ACCOUNTS

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