Cyprus Taxation incentives for High-net worth individuals moving to Cyprus – Illustrative examples
Cyprus is now encouraging High-net worth individuals to move to Cyprus by giving personal taxation incentives
1. Exemption from Cyprus personal taxation of High-net worth individuals moving to Cyprus
The introduction of "Domicile" regime aims to exempt High-net worth non-domiciled individuals moving to Cyprus from personal taxes (Special Contribution for Defense). High-net worth non-domiciled individuals (non-doms) will need to declare Cyprus as their taxable jurisdiction and receive an exemption from Cyprus personal taxes (Special Contribution for Defense) on rents (3% on 75% on rent income), interest (30%) and dividends (17%) which are applicable to Cyprus domiciled individuals.The exemption will apply for 17 years as from the date of declaring Cyprus as their taxable jurisdiction.
2. Income from Cyprus employment will be given a 50% tax exemption provided that annual remuneration exceeds €100.000.
Income from employment that exceeds €100.000 annually by any individual whose residence was outside Cyprus before the commencement of the employment in Cyprus will be given a 50% tax exemption. The exception is applicable for the first 10 years of employment. Considering personal taxation rates currently applicable in Cyprus, the effective taxation on € 100.000 remuneration is 6.2%.
Illustrative example 1 – A foreign individual commences employment in Cyprus. His income from employment is € 100.000 per annum
|
Taxable income |
Tax | Tax | Accum | |
| From | To | Rate | Tax | |
| € | € | % | € | € |
| 0 | 19,500 | 0 | 0 | 0 |
| 19,501 | 28,000 | 20 | 1,700 | 1,700 |
| 28,001 | 36,300 | 25 | 2,075 | 3,775 |
| 36,301 | 50,000 | 30 | 4,110 | 6,185 |
Foreign individual will be taxed € 6,185 or 6.2%
Illustrative example 2 – A foreign individual commences employment in Cyprus. His income from employment is € 150.000 per annum
|
Taxable income |
Tax | Tax | Accum | |
| From | To | Rate | Tax | |
| € | € | % | € | € |
| 0 | 19,500 | 0 | 0 | 0 |
| 19,501 | 28,000 | 20 | 1,700 | 1,700 |
| 28,001 | 36,300 | 25 | 2,075 | 3,775 |
| 36,301 | 60,000 | 30 | 7,110 | 10,885 |
| 60,001 | 75,000 | 35 | 5,250 | 16,135 |
The foreign individual will be taxed €16,135 or 16.1%
Conclusion
In summary, High-net worth individuals moving to Cyprus will be,
+ Exempt from personal taxes on interest income received in Cyprus
+ Exempt from personal taxes on dividend received in Cyprus
+ Taxed €6,185 or 6.2% on Income form employment in Cyprus of € 100.000
Published October 2015
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.
