Cyprus Tax Residency: A Guide to Benefits and Requirements

Cyprus is a popular destination for those seeking a tax-advantageous residency. Whether you’re a seasoned investor, a budding entrepreneur, or simply someone seeking a more tax-friendly lifestyle, Cyprus offers a unique opportunity. By understanding the residency requirements and the multitude of benefits, you can unlock the door to a prosperous future in a safe, exciting and promising environment.

Why Cyprus?

· Low Tax Rates: Cyprus boasts a low corporate tax rate (12.5%) and attractive personal income tax rates.

· Favorable Business Environment: The island offers a business-friendly environment with no restrictions on foreign ownership and repatriation of profits.

· Low Cost of Living: Compared to other European countries, Cyprus offers a relatively affordable lifestyle.

· EU Membership: Benefits include access to the European market and visa-free travel within the Schengen Area (for qualifying residents).

Qualifying for Residency

There are two main ways to become a Cyprus tax resident:

· 183-Day Rule: Traditionally, spending more than 183 days in a year in Cyprus qualifies you.

· 60-Day Rule: This recent addition allows residency with just 60 days in Cyprus, provided you meet additional criteria:

o Not being a tax resident elsewhere.

o Spending less than 183 days in any other single country.

o Maintaining a permanent residence in Cyprus (owned or rented).

o Carrying out business activities, working, or being a director in a Cyprus tax-resident company.

Benefits of Residency

· Tax Exemptions: Non-domiciled residents enjoy various exemptions, including:

o No tax on dividend income from foreign sources.

o No Special Defence Contribution on dividends, rental income, or passive interest income for 17 years.

· Reduced VAT Rates: Cyprus offers some of the lowest VAT rates in Europe, with categories as low as 5%.

Additional Considerations

· Company Registration: Establishing a Cyprus company can facilitate residency and offers its own tax benefits, like a low corporate tax rate.

· Social Security: Residents contribute to the Social Insurance Fund and the General Healthcare System (GESY) based on their income.

By carefully considering these factors, you can determine if Cyprus tax residency aligns with your goals and plan your path to residency effectively.

Our Corporate Law Department can help you navigate the intricacies of Cyprus Tax Residency and its specific requirements. Get in touch at [email protected] or visit www.diogenouslaw.com