Cyprus Tax Resident - Constantinos Markou & Co

Cyprus Tax Residency

Find out how to become tax resident in Cyprus and obtain the non-dom status

Why Cyprus?

Cyprus’ offers a wonderful living experience combining a stress-free and relaxed way of life in a safe environment with a contemporary character, ideal for people who seek balance between work and pleasure. Cypriot legislation includes several tax incentives for individuals who seek to relocate and become Cyprus tax residents.

Non-Tax Reasons

The safest country in the World for countries with less than 5 million population (ValuePenguin.com, 2015)
Multicultural environment, over 20% of the population in Cyprus are non-Cypriots
Clean waters with the highest number of Blue Flag beaches per capita in the world (EU Blue Flag ranking, 2015)
The 5th best relocation destination worldwide (Knight Frank Global Lifestyle Review, 2013)

Tax Reasons

0% tax on capital gains on the disposal of shares and other titles
0% tax on interest income for non-domiciles
0% tax on dividends for non-domiciles
Absence of wealth and inheritance tax
50% exemption from tax on salary exceeding EUR100,000

Procedures

The procedure of becoming a tax resident involves certain registrations and attendance to a number of authorities and organizations. We will guide you from the beginning until the successful completion of the whole procedure.

1. Place of residence

The first step in acquiring your tax residence in Cyprus is to locate a suitable residential property for rent or acquisition.

2. Social Insurance

On the basis that you will be employed by a Cyprus company, you will have to register with the Cyprus Social Insurance Department.

3. Immigration Department

Within 4 months of your visit to Cyprus, you need to register with the Migration Department by attending a 5 minutes meeting accompanied by us. Depending on your nationality (EU or non-EU), there are different routes to obtain your permit. With respect to Employment Permits to employees of companies of foreign interests (IBC) please visit our dedicated page here.

4. Tax Department

Once you obtain your registration number from the Migration Department, you need to register to the Cyprus Tax Department and obtain a Cyprus Tax Identification Number.

5. Non-Domicile Certificate

Once all procedures are completed and requirements fulfilled, we can apply for a Non-Domiciled Certificate.

Physical Presence Tests

A physical person is considered tax resident in Cyprus for any calendar year if he/she fulfills any one of the following two tests:

A. 60 days

Physical presence in Cyprus of at least 60 days in any calendar year (after 1 January 2017) and fulfillment of all the following conditions.

Carries on a business in Cyprus as a self-employed person, or is employed in Cyprus or holds an office with a Cyprus tax resident person (e.g. be a director of a Cyprus company) at any time during the tax year.
Does not spend more than 183 days in any other country
Maintains a permanent home in Cyprus that is either owned or rented;
Is not a tax resident of any other country;

If the business, employment or holding of an office is terminated during the year, then the individual would cease to be considered a Cyprus tax resident for that tax year.

B. 183 days

Physical presence in Cyprus for more than 183 days in any calendar year.

For the purpose of calculating the days of presence in Cyprus:

the day of arrival into Cyprus and arrival and departure from Cyprus on the same day is considered as a day in Cyprus.
the day of departure from Cyprus and the departure and return to Cyprus on the same day is considered as a day out of Cyprus.

Individuals who are considered Cyprus tax residents (either through the 183 day rule or the 60 day rule) are subject to Income Tax in Cyprus on their worldwide income, both from sources in Cyprus as well as from abroad. Non-Domiciled individuals are exempt from tax on dividends and passive interest income for 17 years.

Non Domiciled Provisions

In brief, an individual is considered as non-domiciled in Cyprus for tax purposes provided that:

He/she does not have a Cypriot domicile of origin and
has not been a Cyprus tax resident for 17 years in the previous 20 years

Thus, any individual who becomes Cyprus tax resident and does not have a Cypriot domicile of origin, shall be considered as non-domiciled for tax purposes until such person is tax resident in Cyprus for 17 years out of the previous 20 years. This test should be performed every year.

Note: There is scope for an individual with a Cypriot domicile of origin to be considered as non-domicile of Cyprus provided certain conditions are met.

In accordance with the Cypriot Wills and Succession Law, an individual has at any given time one of the following two domiciles:

The domicile of origin, given at birth, which generally follows the domicile of the father and
The domicile of choice, acquired or maintained through the individual’s actions.

In general, a person acquires a domicile of choice in a country by establishing his/her residence there with the intention of a permanent or indefinite stay. Thus, the domicile of origin is maintained until the person acquires a domicile of choice. The domicile of choice is maintained until the person acquires a new domicile of choice or reverses back to his/her domicile of origin.

Individuals who move their personal tax residency to Cyprus and fullfill the non-domiciled provisions, shall be considered as non-domiciled (‘non-doms’) for Cyprus tax purposes for a maximum of 17 years. As a result, non-doms are completely exempt from tax on any dividends or interest income earned.