Cyprus Citizenship & Taxation

Tax implications of Cyprus Investment Programmes

Dr. Jean-Philippe Chetcuti | Published on 23 May 2015 | Updated on 27 Nov 2018

Cyprus Citizenship Taxation

Cypriot citizenship alone does not effect the tax treatment of an individual or family unless they take up residence in Cyprus. Cyprus' connecting factors for tax jurisdiction are residence and domicile (not nationality) and therefore the link between Cyprus Citizenship & Taxation is not obvious.

Cyprus Taxation of New Citizenship: Domicile

A person who is granted citizenship under the Cyprus Citizenship by Investment Programme is not deemed to acquire a domicile of choice by virtue simply of being granted citizenship. A number of onerous steps need to be taken to shed one's domicile of origin and it is safe for a client to assume that his domicile will not change 'by mistake' even by taking up residence as a citizen of Cyprus.

Cypriot Taxation of Non-Residents

The main tax connecting factor is Cypriot tax residence. By taking up residence in Cyprus, an individual (whether a citizen or not) enters into a non-dom regime akin to the regime applicable in the UK, even if without the complicated residence tests and rules applicable in the British tax system. Basically, a Cypriot resident who is not Domiciled in Cyprus is chargeable to tax in Cyprus only on a source and remittance basis. Therefore he would be chargeable to tax only on income arising in Cyprus and on foreign source income if and to the he extent that it is remitted /received in Cyprus.  Foreign source capital gains are out of scope of taxation even if remitted to Cyprus. The tax planning opportunity here is that foreign source income and foreign capital gains that is kept in bank accounts outside Cyprus remain out of scope of Cyprus tax.

Cyprus Tax Residency

Cypriot Income Tax Law defines a “resident in the Republic”, when referring to individuals as an individual who stays in the Republic for a period or periods exceeding in aggregate 183 days in the year of assessment. A “nonresident or resident outside the Republic” will be construed accordingly.

Resident persons will be charged to tax on their worldwide income subject to significant tax holidays on most income sources.

Non-resident persons will be charged to tax on their income accruing or arising in respect of:

  • Income from any trade, business, profession or vocation carried on or exercised as far as attributable to a permanent establishment in Cyprus;
  • Profits or other benefits from any office or employment exercised in Cyprus;
  • Any pension as a result from a past employment exercised in Cyprus with the exception of any pension paid out of funds created by the Government or a local authority;
  • Rents from property situated in Cyprus;
  • Trade Goodwill from sources within Cyprus.

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Key Contacts

Dr Jean-Philippe Chetcuti

Senior Partner, Tax & Immigration

+356 22056411

Dr Antoine Saliba Haig

Senior Lawyer

+356 22056446

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