A Cyprus tax resident physical person is any person who is physically present in Cyprus for more than 183 days in a calendar year. It does not matter the purpose of being in Cyprus, nor is it a condition that a Cyprus tax resident person owns or rents accommodation in Cyprus. It is literally based on the number of days without any further conditions.
In calculating the days:
- the day of departure is considered a day outside of Cyprus
- the day of arrival is considered a day in Cyprus
- arriving in Cyprus and departing on the same day is considered a day in Cyprus, and
- departing from Cyprus and arriving on the same day is considered a day outside of Cyprus
Also as of 1 January 2017, an individual will be considered a Cyprus tax resident if he/she:
- does not spend more than a total of 183 days in any country within a tax year; and
- is not a tax resident of another country within the same tax year
and satisfies the following three conditions:
- remains in Cyprus for at least 60 days during the tax year;
- carries on a business in Cyprus or is employed in Cyprus or holds an office in a Cyprus tax resident company at any
time during the tax year; and
- maintains a permanent residence in Cyprus, which can be either owned or rented.
It is important to note that, if the employment/business or holding of an office as per (b) above is terminated, then the individual shall cease to be considered a Cyprus tax resident for that tax year under the 60 days tax residency scheme.
Where a person is non-domiciled in Cyprus, but is a Cyprus tax resident, the following main benefits exist, for a period of at least 17 years, i.e. until the person is deemed domiciled in Cyprus:
- no Cyprus tax is payable on receipt of any dividend income from anywhere in the world (although on foreign
dividends, the source country may withhold taxes)
- the provisions whereby a Cyprus tax-resident company must declare at least 70% of its after-tax accounting profits
within two years (known as the ‘deemed distribution rules’), do not apply to that proportion of shareholding beneficially
owned by a non-Cyprus domiciled individual
- no Cyprus tax is payable on receipt of interest income from anywhere in the world (although on foreign interest,
the source country may withhold taxes)
Income Tax Rates
Taxable income, i.e. gross income less exemptions less deductions, up to €19.500 is exempt from income tax.
The taxable income exceeding this amount is subject to progressive tax rates ranging from 20% to 35% (the higher rate being for taxable income exceeding €60.000).
Expatriates have specific exemptions relating to salary remuneration, subject to certain conditions.
Cyprus tax does not have any exit taxes, any inheritance tax or endownment taxes.