Cyprus Tax Residency for Individuals

Cyprus Tax Residency & Non-Dom for Individuals

Interested in making the most of your income?

Cyprus offers some major benefits for individuals who are tax resident on the island, varying from a 50% tax exemption when your income is above €55,000 to tax-free dividends when you are designated as a non-dom.

How to be a Cyprus Tax Resident

An individual is a tax resident of Cyprus if satisfies one of the following criteria:

The 60-day rule offers individuals the option to become a Cyprus tax resident after spending only 60 days in the country provided that:

  • You do not reside in any other country for a time period of more than 183 (collective) days
  • Are not a tax resident in any other country and reside in Cyprus for at least 60 days
  • Maintain a residential property in Cyprus either renter or owned
  • Have additional Cyprus ties, including: Contract of employment, Business ownership or being a director of a Cyprus Tax Resident company

An individual in Cyprus becomes a tax resident of the island for income tax purposes, provided they stay physically for over 183 days in total within the year. Some of the major benefits of being a tax resident in Cyprus are analysed below and here.

The “Cyprus Digital Nomad Visa” Scheme allows nationals of non-EU and non-EEA countries who can work location independently to temporarily reside in Cyprus and work for an employer registered abroad or provide digital services for companies/clients located abroad using the power of the internet.
Individuals who are granted a residence permit as a Digital Nomad will be eligible for the following benefits:

  1. A one-year right of residency in Cyprus, with the option of extending it for another two years. Family members have the right to live in Cyprus for the same term as the Digital Nomad, but they are not allowed to work or engage in economic activities. the same tax year.
  2. The applicants are considered tax residents of Cyprus if they remain in the Republic for one or more periods totaling more than 183 days in the same tax year, assuming they are not tax residents of another nation.
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Benefits for expatriates

Exemptions regarding employment income Individuals who were based overseas and who were not Cyprus tax-residents before the commencement of their employment in Cyprus, may be entitled to one (but not both simultaneously) of the following exemptions:

Individuals who take up employment in Cyprus with an annual income in excess of €100.000 (revised to €55,000 in 2022) will be eligible for an exemption from taxation of 50% of their income for a period of 10 years, commencing from the year of employment. Note: The exemption is not given to an employee who was a tax resident in any three out of the five years preceding the year of employment and to an employee who was resident in the year preceding the year of commencement of employment. Please note that this rule is expected to be amended favourably in 2022.

Individuals who take up employment in Cyprus and were not tax resident in Cyprus prior to commencing such employment, will be eligible for an exemption from taxation of 20% of their income or €8.550 (whichever is lower) from any employment which is exercised in Cyprus. Note: This exemption applies commencing from 1st January of the year following the year of commencement of such employment.

Foreigners who decide to move their personal tax residency in Cyprus, will automatically be considered as non-domiciled in Cyprus for a maximum of 17 years.
For tax purposes, non-domicile persons who become Cyprus tax residents will now be completely exempt from Special Defence Contribution tax (“SDC”). SDC generally applies on dividends and interest. As SDC tax does not apply in the case of Cyprus tax resident individuals who are non-domiciled in Cyprus, dividend and interest earned by such persons will now be completely tax exempt in Cyprus. It is noted that the main income of high net worth individuals is generally dividends and interest. Furthermore, irrespective of domicility, foreigners becoming Cyprus tax residents enjoy an array of other significant tax advantages; with the main ones being outlined below.

Other Considerations

  • 100% exemption on lump sum repayments from life insurance schemes or from approved provident funds.
  • No inheritance and gift taxes.
  • No wealth taxes.
  • No immovable property taxes.
  • Capital gains from the sale of immovable property situated outside Cyprus is exempt from tax.
  • Capital gains tax is only imposed on the sale of immovable property situated in Cyprus as well as on the sale of shares directly or indirectly held in companies (other than listed shares) in which the underlying asset is immovable property situated in Cyprus.

How we can assist

The statutory requirement:

A Cyprus Tax Resident will need to register with the Cyprus Tax and Social Insurance Authorities and submit their annual Income Tax Return (TD1) once per calendar year provided that they are earning more than €19,500 in the tax year. The individual will also need to Pay Tax as they earn based on the following rates:
Chargeable Income €Tax Rates (%)
0 - 19.5000
19.501 – 28.00020
28.001 – 36.30025
36.301 – 60.00030
60.001 onwards35

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