Get Cyprus Tax Residency

Get Cyprus Tax Residency

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An individual is considered to be tax resident in the Republic of Cyprus provided that he/she was physically present in the Republic of Cyprus for a period exceeding 183 days.

A tax resident in the Republic of Cyprus is taxed in the Republic of Cyprus on its worldwide income. The tax rates applicable to tax resident individuals are the following:

CHARGEABLE INCOME / TAX YEAR
TAX RATE (%)
ACCUMULATED TAX
First €19.500
 0%
 €0
 €19.501 – €28.000
 20%
 €1.700
 €28.001 – €36.300
 25%
 €3.775
 €36.301 – €60.000
 30%
 €12.585
 Over €60.000
 35%
 –

 

It is worth noting that some specific types of income are subject to Special Defense Contribution. More specifically, the Special Defense Contribution is imposed on dividends, interest, Cyprus Government saving bonds / Cyprus Government development stocks / approved Provident Fund / Social Insurance Fund / Individual whose total income (incl. interest) does not exceed €12.000 and rents. Subject to the exceptions provided for in the Cyprus legislation (especially for legal persons), the Special Defense Contribution rates applicable to tax residents are the following:

 SOURCE OF INCOME
 SDC RATE
 Dividends
 17%
 Interest (other than business business)
 30%
 Cyprus Government saving bonds / Cyprus Government development stocks / approved Provident Fund / Social Insurance Fund / Individual whose total income (incl. interest) does not exceed €12.000
 3%
 Rents (on 75% of the gross income from rents)
 3%

On that basis and subject to a series of exceptions provided for in the Cyprus legislation, in order for a natural person to be considered as a tax resident of the Republic of Cyprus for the purposes of Special Defense Contribution, he/she must be a ‘tax resident in the Republic of Cyprus’ for income tax purposes while, at the same time, he/she must have either his/her:

  1. Domicile of origin in the Republic of Cyprus: the domicile that a person acquires at the time of his/her birth.
  2. Domicile of choice in the Republic of Cyprus: the domicile that a person acquires and maintains as a result of his/her actions and intentions.

Despite the above, even if domiciled, an individual might be considered as non-domiciled (and, thus, not liable to pay special defence contribution) in the following cases:

An individual is considered to be tax resident in the Republic of Cyprus provided that he/she was physically present in the Republic of Cyprus for a period exceeding 183 days.

A tax resident in the Republic of Cyprus is taxed in the Republic of Cyprus on its worldwide income. The tax rates applicable to tax resident individuals are the following:

That said, an individual who has his/her domicile of origin abroad but who is considered as Cyprus tax resident, will not be subject to SDC unless he/she is a tax resident of Cyprus for at least 17 out of the 20 last years – then, he/she is liable for SDC as from the 18th year onwards.

Going further, in terms of taxation of legal persons, companies whose management and control is exercised in Cyprus are considered as tax residents in the Republic of Cyprus and, thus, are subject to corporation tax at a rate of 12,5% (following the deduction of related expenses incurred in the course of production of this income) in regards to the income arising from sources both within and outside Cyprus. The main exceptions from the imposition of income tax that apply to all Cyprus companies are the following:

Nevertheless, although management and control is not limited to pre-defined criteria, some of the indicators (which are not conclusive) proving that management and control is exercised in Cyprus are the following:

In this respect, it is important to note that whether management and control is exercised in Cyprus shall be determined in accordance to the peculiarities of each particular case while such tax status will be examined both by the Cyprus tax authorities and the foreign tax authorities of any other involved country.

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