The UK’s non-domicile (non-dom) tax regime has long been an attractive option for high-net-worth individuals seeking favorable tax treatment. However, with the recent announcement by the UK government that this regime will be abolished effective 6 April 2025, individuals currently benefiting from it or considering relocating are now searching for alternative solutions that meet their tax and financial planning needs.
The cancellation of the UK’s non-dom tax regime marks a significant shift in the global tax landscape, impacting thousands of non-domiciled residents who have relied on this system to minimize their tax obligations. This change is part of the government’s broader efforts to address economic and fiscal challenges and is expected to have substantial implications for high-net-worth individuals. For more details on the official announcement and its implications, visit UK Government Non-Dom Announcement.
Why Consider Cyprus for Your New Tax Residency?
Cyprus has emerged as a top destination for individuals (both EU and non-EU nationals) looking for an effective and efficient tax residency solution. The Cyprus non-dom tax regime offers significant benefits and provides an ideal environment for those needing a new base for both personal and business activities.
Key Features of the Cyprus Non-Dom Regime
Automatic Eligibility: Foreign individuals who become tax residents in Cyprus automatically qualify for the non-dom tax regime, which can be utilized for up to 17 years.
Flexible 60-Day Rule: Individuals can establish tax residency in Cyprus quickly through the convenient 60-day rule, providing a seamless transition for those needing to relocate their tax base promptly. More information on tax residency and 60-day rule requirements can be found here.
Tax Exemptions: Cyprus non-dom residents enjoy full exemption from taxation on dividends and interest, irrespective of the source and whether these funds are remitted to Cyprus or not.
Capital Gains: Complete tax exemption on profits from the sale of shares and qualifying securities, as well as on capital gains not related to immovable property in Cyprus.
No Inheritance Tax: Cyprus does not impose inheritance tax, offering peace of mind for estate planning.
Why High-Net-Worth Individuals Choose Cyprus
For individuals with substantial incomes derived from dividends, interest, and capital gains, the Cyprus tax regime is particularly beneficial. The island’s business-friendly environment also provides a competitive edge, featuring:
Low Corporate Tax Rates: Cyprus boasts one of the lowest corporate tax rates in the EU at 12.5%. You can read more about our tax system here.
Business Infrastructure: The well-established infrastructure supports the development of operational substance for companies.
Legal and Business Framework: The legal system is based on English common law, ensuring clarity and reliability for business operations.
Cost Advantage: A comparatively lower cost of establishing and maintaining business presence versus other prime EU jurisdictions.
Beyond Tax Benefits: A Balanced Lifestyle
Cyprus isn’t just about favorable tax rates. The island offers an excellent quality of life characterized by:
Ideal Geographical Location: Located at the crossroads of Europe, Asia, and Africa, Cyprus provides easy access to major markets.
Mediterranean Climate and Natural Beauty: The island is known for its warm weather, blue-flag beaches, and scenic landscapes.
Safety and Stability: Cyprus maintains a low crime rate, making it a secure environment for families.
Modern Infrastructure: High-quality housing, international schools, advanced healthcare, and a cosmopolitan lifestyle add to its appeal.
A Prime Business Hub
Cyprus offers more than just personal tax benefits; it’s a strategic hub for international business operations. Companies can benefit from:
Relocation Incentives: Provisions for businesses and key management to easily relocate to Cyprus.
Professional Services: A robust network of local service providers, including legal, financial, and administrative services, enhances ease of doing business.
How Asterisk Corporate Services Can Assist
Navigating a transition to Cyprus can be seamless with the right support. Asterisk Corporate Services offers comprehensive assistance with:
- Company Incorporation: Assistance in setting up and managing a Cyprus company, including redomiciliation services.
Immigration Processes: Guidance through all necessary immigration and residency requirements.
Tax Registration and Compliance: Ensuring tax registrations and ongoing personal income tax obligations are met.
Fiduciary Services: Establishing Cyprus International Trusts with professional trustee services.
Banking Solutions: Opening and managing local and international bank accounts.
Accounting and Bookkeeping: Full range of financial management services to ensure compliance and efficiency.
Conclusion
With the impending end of the UK non-dom tax regime, Cyprus presents an unmatched opportunity for high-net-worth individuals seeking a favorable tax environment coupled with an exceptional quality of life. Asterisk Corporate Services is here to guide you through every step of the process, ensuring a smooth transition and successful establishment in Cyprus.
For more details and tailored advice, contact us today at Asterisk Corporate Services and begin your journey to benefiting from the Cyprus non-dom regime.
For comprehensive solutions that align with your tax and business needs, visit asterisk.cy.
Information provided above is for information purposes and does not constitute any form of advise. For formal advise please contact us or any other tax professional.
Announcement: Extended Deadline for Income Tax Return Submission by taxpayers required to submit Summary Information Table of Controlled Transactions for the years 2022 and 2023.
The Tax Department announced that the Council of Ministers has approved an extension for the submission of Income Tax Returns for taxpayers required to submit a Summary Information Table of Controlled Transactions for the years 2022 and 2023.
New Deadlines
- Income Tax Return for 2022: Extended to 28 February 2025
- Income Tax Return for 2023: Extended to 30 November 2025
The relevant Decrees will be available on the Tax Department’s website shortly after their publication in the Official Gazette.
Relevant announcement here
As per the Assessment and Collection of Taxes Law, every Cyprus Tax resident company must file before 31 July 2024 a declaration of provisional tax assessment form to the tax authorities. This should indicate an estimate of the taxable profit for income tax purposes and the resulting tax liability for current tax year.
Companies that are not expected to have taxable profits in 2024, are not required to submit a Temporary Tax return and take any action on this email.
Payment deadlines
If the Company is expected to be profitable in 2024, provisional tax is payable in two equal instalments, 31st July 2024 (if paid by 31 August 2024 no penalties apply) and 31st December 2024 respectively.
Any final resulting tax for the year 2024 should be settled by 01 August 2025.
Interest & Penalties
Payment of the taxes after the due dates are subject to a 5% penalty which is actually imposed if payments are not made within a month of the due date (31st August 2024 and 31st January 2025).
The provisional tax assessment can be revised prior to payment of the 2nd instalment (31st December 2024) via submission of a revised form to the authorities. In the case of an upward estimation of tax payable, a 5% annual interest is payable (pro rata) on the difference between the revised amount payable and the amount initially declared for the 1st instalment.
Payments of less than 75% of the annual tax liability as provisional tax (cumulative in both instalments) will be subject to a 10% surcharge on the resulting tax liability.
As mentioned above, companies which are not expected to have taxable profits in 2024, are not required to submit a Temporary Tax return and pay any temporary tax to the tax authorities.
Contact us
Contact us at contact@asterisk.cy for any assistance you may need.
Disclaimer
The above is for reference and information purposes only and does not constitute any form of advise.
On 21 June 2024, The Tax Department announced that the deadline for the submission of the Individual Income Tax Return for the year 2023 and payment of the owed tax has been extended to 31 October 2024.
The obligation to submit an Individual Income Tax Declaration for the year 2023 applies to employees, pensioners, and self-employed individuals whose gross total Income for the year 2023 exceeds the amount of €19.500.
Cyprus Tax Authorities announced that the electronic Income Tax Return (form T.D.1) for employees, pensioners and self-employed individuals who do not prepare audited financial statements for the year 2023 is available for submission, via the TaxisNet system.
It is noted that, the obligation to submit an Income Tax Return for the year 2023, arises only when the annual gross income of natural persons exceeds the amount of €19.500.
The deadline for the submission of the Income Tax Return for individuals for the year 2023 and the payment of any tax due without interest and penalties is on 31 July 2024.
If you need assistance you can visit our colleagues at www.taxapp.cy who have developed a smart tool for the preparation and submission of the Income Tax Return.
For any queries feel free to contact us at contact@asterisk.cy.
As of February 1, 2024, the Commissioner of Tax announced adjustments to Cyprus Transfer Pricing Thresholds for 2022. Notably, the Finance category threshold increases to €5.000.000 and all others to €1.000.000. Circular 06/2023 remains applicable amidst ongoing legislative discussions.
Asterisk Corporate Services would like to inform you that from 1/1/2024 an increase in Social Insurance Contribution rates will come in effect.
According to the provisions of the Social Insurance Law of 2010, as of January 1st 2024 both employer and employee contributions on insurable earnings to the Social Insurance Fund will increase by 0,5%, from 8,3% applicable today to 8,8% each.
The below table summarizes the contribution rates which are applicable for the year 2024:
Self-employed individuals | 16,6 % |
Employee’s contribution | 8,8 % |
Employer’s contribution | 8,8 % |
Employer’s contribution to the Redundancy Fund | 1,2 % |
Employer’s contribution to the Human Resource Development Authority Fund | 0,5 % |
Employer’s contribution to the Social Cohesion Fund | 2 % |
The Maximum Limit of emoluments also increases as follows:
Weekly | Monthly | Yearly | |
€ | € | € | |
Weekly employees | 1.209 | 64.077 | |
Monthly employees | 5.239 | 62.868 |
Do not hesitate to contact us for any questions you may have.
The Cyprus Tax Department announced on 28 August 2023 that they have made available for submission in TAXISnet system the 2022 Company Income Tax Return Form (TD4) and the self-employeed with accounts form.
Last date for timely submission of the above is 31 March 2024.
The Tax Department urges taxpayers and their representatives, to take advantage of the 7-month period that is provided for timely submission of the above Tax Forms.
The aim of the Department is to adhere to the timetables and deadlines, as provided by the current legislation and for the avoidance of extensions, achieving high levels of tax compliance.
Contact us for any clarifications you may need.
On 22 June 2023 the House of Representatives passed some further amendments to the Income Tax Law (“ITL”) in relation to article 8(23A). The key amendment is the fact that eligible individuals will be able to now change employers and not lose the benefit.
Article 8(23A) provides a 50% exemption from income tax on the employment related remuneration of eligible individuals (subject to conditions).
The amendments that were made to article 8(23A) are applicable retrospectively from 1 January 2022 and are the following:
- The exemption from income tax will be granted if the individual was not a resident of Cyprus for 15 consecutive years (previously 10 years) prior to any employment in the Republic.
- The exemption will be granted for a period of 17 years from the date of employment (or until the termination of the provisions of article 8(23A)), irrespective of whether the individual changed his/her employer during the 17 years. Previously, the exemption was only granted for the first employment of the individual in Cyprus.
It should be noted that the above amendments also apply to the transitional provisions that were initially introduced in article 8(23A) when the legislation was published in the Official Gazette of the Republic on 26 July 2022.
The individuals that were eligible for the 50% exemption from income tax on their remuneration from employment based on the old provisions of article 8(23A) that were applicable before the amendments outlined above, will continue to claim the 50% exemption, provided that they meet all the conditions of article 8(23A) that were applicable before the entry into force of the relevant amendments.
Feel free to contact us for more information and clarifications.