Cyprus Tax Resident – To Be or Not to be?

Several factors attract individuals to become tax residents in Cyprus, including the fact that Cyprus is a member of the European Union, it has a well established international business and investment hub and of course the various tax benefits that it offers. Individuals may become tax residents in Cyprus under the following conditions.

Cyprus Tax Residency

  1. The one hundred eighty-three (183) days rule: If an individual spend more than 183 days in Cyprus during a tax year, will be considered a tax resident of Cyprus in the respective tax year.
  2. The sixty-days (60) rule: If a person spends more than 60 days in Cyprus and does not stay in any other country for more than 183 days, and has personal and economic links to Cyprus while not being a tax resident abroad, among other criteria can be qualified as a Cyprus tax resident.
  3. Permanent Residency: Obtaining a permanent residence permit in Cyprus also results in tax residency.

Individuals who are designated as tax residents are taxed on their total income, which includes earnings from job, self-employment, property, and investments. Cyprus has a favourable tax policy, which includes low rates and significant exemptions.

Non-Domiciled Tax Status

Non-Domiciled status in Cyprus pertains to tax residents who are non-domiciled in the Republic of Cyprus. This status allows to taxpayers to be exempt from the Special Defence tax, meaning dividend income, rental income and passive interest income is not subject to taxation in Cyprus.

Advantages of receiving the Non- Domiciled Status

  1. Dividend Income received is not subject to 17% Special Defence Contribution Tax (SDC).
  2. Passive Interest income is not subject to 17%.
  3. Rental income is not subject to 2.25% SDC.

Please contact us if you are interested to become tax resident in Cyprus.