Tax residency in Cyprus based on 60 days rule
An individual can be a tax resident of the Republic of Cyprus provided that he/she meets all of the following criteria within the same tax year:
- does not spend more than 183 days in any other country, besides Cyprus;
- is not a tax resident of any other country;
- spends an aggregate period of more than 60 days in the Republic of Cyprus (not obligatory on uninterrupted basis);
- carries on a business or is employed in Cyprus, or holds an office for a company tax resident in Cyprus (to get regular income) at any time during the tax year;
- maintains a permanent home in Cyprus (either owned or rented) – it is necessary at least to enter into a lease contract of a dwelling for a term of (preferably) a year.
Taxation of individuals – tax residents in Cyprus
- Income tax – Progressive tax rate:
- 0% (taxable income EUR 0 –19 500);
- 20% (taxable income EUR 19 501 – 28 000);
- 25% (taxable income EUR 28 001– 36 300);
- 30% (taxable income EUR 36 301 – 60 000);
- 35% (taxable income EUR 60 001+).
- Dividend income is exempt from income tax but special defense contribution is deducted (SDC) – 17%.
- Interest income tax is exempt from income tax but SDC is deducted – 30%.
While having dividend and interest payment the contribution to General Healthcare System (GHS) in the amount of 2.65% is levied (levied from the income up to EUR 180 000 a year).
Non-domicile status in Cyprus
Acquiring this status will let obtain SDC exemption, which rates were mentioned above. As a result, contribution to healthcare (2.65% from the income up to EUR 180 000 a year) will only be levied on dividends and interest.
In brief, an individual can have a domicile of origin or a domicile of choice in Cyprus. An individual obtains a domicile of choice if he/she has been a tax resident of Cyprus for at least 17 out of 20 years prior to tax year.
So when obtaining tax residency of Cyprus the client will possess non-domicile status.
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.