Personal taxation in Cyprus

Cyprus personal income taxation

Dr. Antoine Saliba Haig | 27 Aug 2018

Personal taxation in Cyprus

The taxation system in Cyprus has broadened the scope of persons who are eligible as tax residents. Through recent amendments introduced in 2017, persons who merely spend 183 or 60 days in Cyprus will be considered ‘tax resident’ and therefore will be charged on the income which arises or accrues in or outside of the State.

The 183-day Rule

The first incentive which was introduced allowed persons who spent 183 days in Cyprus to qualify as tax residents. Besides this condition, the individual must satisfy the following within the tax year (1st January – 31st December) to be eligible:

  1. Not spend more than 183 days within any other country; 
  2. Not be a tax resident of any other country; 
  3. Spend a minimum of 60 days in Cyprus; 
  4. Have a permanent home in Cyprus which is either owned or rented; 
  5. Carry out business in Cyprus, be employed in the Republic, or hold an office of a person who is a tax resident during that tax year. If such employment ceases during the year, the individual would no longer be considered as a Cyprus Tax Resident.

The 60-day rule

A subsequent taxation scheme was introduced as of July 2017, the 60-day rule. The intention was to attract significant individuals to Cyprus, including investors, entrepreneurs and other businessmen, who are not eligible for tax residency in any country. Therefore, by making themselves eligible under the 60-day rule, they would no longer be exposed to tax authorities all over the world.

Individuals will be eligible to benefit from the 60-day rule if they satisfy the following conditions:

  1. They do not reside in any other single state for more than 183 days aggregate; 
  2. They aren’t tax residents in any other state; 
  3. They reside in Cyprus for at least 60 days within a tax year; 
  4. They have defined Cyprus ties - the individual must either carry out business in Cyprus, be employed in Cyprus or hold an office of a company in Cyprus. If the employment ceases before the termination of the tax year, the scheme will not apply. 
  5. The individual must have a permanent residency in Cyprus which is owned or rented.

Under both schemes, the stipulated days of presence must be calculated at satisfied, guidelines have been provided for such:

  1. Day of arrival in Cyprus is a day in Cyprus; 
  2. Day of departure is a day out of Cyprus; 
  3. Arrival into Cyprus and departure from the Republic on the same day is a day in Cyprus 
  4. Departure from the republic and return to republic on the same day is considered a day out of Cyprus.

Benefits of Cyprus tax residence

Persons qualifying as tax residents under these 183-day rule or the 60-day rule, will subsequently be taxed in Cyprus for any income which accrues or arises in or outside of Cyprus. These incentives, however, also offer applicants certain exemptions within specific situations:

  • Non-domiciled Cyprus tax residents will be exempt from Cyprus tax on their worldwide dividend and passive interest income; 
  • Profits arising from the sale of securities will be exempt from tax. 
  • Individuals who are employed in Cyprus and receive an income which exceeds €100,000 will benefit from a 50% discount on income tax in Cyprus for a period of 10 years. It is essential that such individual was not a tax resident in Cyprus before employment in Cyprus. 
  • Income arising from employment outside Cyprus will be exempt from income tax if the employment in question exceeds 90 days within a tax year.

Our Services

Our lawyers at Chetcuti Cauchi Advocates have a wealth of experience on the legal issues arising from Cyprus tax. Understanding the needs and interests of our client, our Tax advisors will ensure that thorough representation is provided to our clients before the competent Authorities and other parties. As a multidisciplinary firm, experts from other teams will also provide our clients with assistance on any issue which may arise, spanning from corporate/personal tax advice, to estate planning, company administration and employment law.

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