A guide on residence and working permit requirements for living and working in Cyprus, including a summary of key facts relating to the Cyprus personal income tax system
An EU-national or EEA-national (Iceland, Liechtenstein, Norway and Switzerland) can enter and stay in Cyprus for three months without completing any formalities. If an EU-national or EEA-national, wishes to live and work in Cyprus for a longer period, a short registration process would have to be completed in Cyprus, obtaining a Registration Certificate for EU-Nationals/EEA- nationals (also known as the 'yellow slip').
A non-EU/EEA national would be required to apply for an Immigration Permit (also known as the 'pink slip') to live and work in Cyprus and there are different categories of Immigration Permits issued, primarily depending on the type of work carried out.
We will concentrate in this short guide on two types of permits for non-EU nationals, one relating to digital nomads living and working in Cyprus and the other one relating to non-EU nationals relocating to Cyprus to work for companies operating in Cyprus.
Digital Nomads' Permit for workers in global gig economy and freelance entrepreneurs
An increasing number of the global talent workforce is adopting an independent, freelance, and remote working model, allowing talented professionals to work from anywhere in the world.
The global gig economy exists due to internet connectivity and technology. Remote working is now considered a well-established practice and international companies are open to engaging individuals as part of their remote working policy, who live and work anywhere in the world.
Cyprus has introduced a Digital Nomads Immigration Permit to allow non-EU nationals who work flexibly, remotely and use technology to perform their work, to live and work in Cyprus.
This type of temporary immigration permit is particularly popular for people working in global organisations, taking up IT, HR, marketing, executive and other managerial roles.
\\ The benefits of the Cypriot Digital Nomads Permit are that a non-EU national can:
- live and work in Cyprus for up to one year, with the possibility to renew this for up to two more years,
- relocate their family in Cyprus for the same period for which the Digital Nomads Immigration Permit has been issued (provided such family members do not work in Cyprus)
- obtain tax residency in Cyprus and pay taxes in Cyprus (as further explained in Cyprus Personal Income Tax below)
\\ During the application process the applicant for a Digital Nomads Permit must demonstrate that she/he:
- works remotely using information and communications technology
- works remotely via a self-owned company or another company, located outside of Cyprus or is self-employed and his/her customers are located outside Cyprus
- receives sufficient and adequate monthly income to support their living in Cyprus, of at least €3,500, after the deduction of mandatory contributions and taxes (where such minimum requirement is increased by 20% if a spouse will relocate with him/her and by additional 15% for every child that will relocate with him/her).
- holds a clean criminal record certificate from the country of residence
- holds a medical insurance that covers the in-patent, out-patient and transportation of mortal remains.
Residence and Working Permit for non-EU nationals working for companies operating in Cyprus
Cyprus has developed a relocation program to attract innovative business and talent to Cyprus. Companies which operate in Cyprus can relocate their non-EU nationals to Cyprus, so that they can live and work in Cyprus.
The companies which are eligible to apply for this relocation program, include any of the following:
- company with majority of its issued share capital is owned by third-country nationals; noting that where foreign participation in the share capital of the Company is equal to or below 50% of the total share capital, the Company is eligible when this percentage of the share capital represents an amount equal to or greater than the amount of €200,000; or
- Cypriot shipping companies; or
- Cypriot high-technology or innovation companies; or
- Cypriot pharmaceutical companies or companies operating in the fields of biogenetics and biotechnology; or
- public companies registered on any recognised stock exchange.
An eligible company applying for this program, and which falls within any one of the above categories, must be established and operate in independent and suitable offices located in Cyprus, separate from any private residence or other office (i.e. maintaining real substance in Cyprus).
This relocation program applies to relocation of:
- Highly skilled non-EU/EEA nationals, provided
following criteria are met
- they will be paid a minimum gross monthly salary of € 2,500,
- they will hold a university degree or diploma or equivalent qualification or confirmation of relevant experience in a corresponding employment position of at least 2 years duration, and
- they submit an employment contract of not less than two years.
The maximum number of non-EU/EEA nationals that can be relocated and employed in Cyprus is set at 70% of all employees of Cyprus company over a period of 5 years, from the date of joining this relocation program. After the lapse of 5 years, if it is not possible to employ 30% of Cypriot workers, the matter will be re-examined on a case-by-case basis.
- Support staff from non-EU/EEA countries,
provided following criteria are met
- They will be paid a gross monthly salary of less than € 2,500
- Employment of such support staff does not exceed 30% of the total support staff employed by the Cyprus company
- There is an employment contract between the non-EU/EEA national and the employer which is duly validated in accordance with current legislation
This relocation program provides a right for family reunifications for spouses whose family member has obtained a residence and work permit in Cyprus under this program, and who receive a minimum gross monthly salary of € 2,500 (excluding support staff).
Cyprus Personal Income Tax
Cyprus personal income taxes operate under a progressive system. There is a lower tax rate applicable for low-income earners and higher tax rates for high-income earners.
Any person that is deemed tax resident of Cyprus is taxed in Cyprus for the worldwide income which accrues or arises from sources that come within Cyprus or outside Cyprus.
An individual will be considered a tax resident of Cyprus if she/he spends more than 183 days (six months and one day) in a tax year in Cyprus.
Alternatively, an individual may also be considered a tax resident of Cyprus under the '60-day tax residency rule' if:
- spends at least 60 days in Cyprus; and
- does not spend more than 183 days in any other country; and
- is not a tax resident of any other country; and
- maintains a permanent home in the Cyprus that is either owned or rented; and
- carries on a business in Cyprus, i.e. is employed in Cyprus or holds an office in Cyprus at any time during the tax year. If the business/employment is terminated during the tax year, then the individual will cease to be tax resident of Cyprus.
\\ The applicable tax income tax rates in Cyprus are the following:
Personal income tax allowances are limited to 1/5 of the net taxable income before the allowances are deducted. These allowances include local social insurance contributions, contributions to the Cyprus General Healthcare System, contributions to approved provident and pension funds, contributions to medical or other approved funds, as well as, the life insurance premiums.
Note that certain exemptions apply to the Personal Income Tax, which include, among others, exemption from whole income received from dividend income, exemption from whole income received from interest income (excluding interest income arising in the ordinary course of business or closely connected with the ordinary carrying on of the business.
There are two key tax exemptions on personal income tax for staff relocating to Cyprus:
- Exemption from personal income tax of twenty per cent (20%) of the remuneration from any employment exercised in Cyprus by an individual who was resident outside Cyprus before the commencement of his employment, or €8.550, whichever is the lower. This exemption applies until 2025
- Exemption from personal income tax of 50 % tax exemption over from any employment exercised in Cyprus from an individual who was resident outside Cyprus before the commencement of his employment in Cyprus. This exemption applies for a ten-year (10) period, commencing on the year of employment provided that the said income exceeds hundred thousand Euros (€100.000) annually
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.