Cyprus Non-Domiciled and the 60 days rule
Worldwide Dividend income at zero tax
Under the Cyprus Non-Domicile Scheme, Non-Domiciled tax residents of Cyprus are not subject to defence tax on Dividends, Interest and Rental income. In combination with the exception of dividends from Income taxes, it allows 0% taxation on dividend income from Cyprus and abroad.
Under the current law Defence Tax is payable only by tax residents of Cyprus on dividends, interest and rental income. Tax resident of Cyprus is any individual who spends more than 183 days in Cyprus every year. Under the new tax law, the term “Domiciled” in Cyprus is introduced and those individuals who are not Domiciled in Cyprus would not be subject to defence tax on dividends, interest and rental income.
Domiciled in Cyprus is anyone domiciled by origin or domiciled by choice under the Wills and Succession Law of Cyprus. An individual who during at least 17 years out of the last 20 years is tax resident in Cyprus, will be considered as domiciled in Cyprus.
The above measure excludes owners of companies that are not Cypriots from any defence tax in case they want to re-locate to Cyprus to run their business from Cyprus. Therefore, such individuals will not pay any taxes on dividends or interest income.
60 days rule
This rule came in 2017 as an amendment to the “183 days” rule and provides incentives to high profile individuals, professionals and executives to become Cyprus Tax residents.
The 60 days rule is effective as from tax year 2017. An individual can become a tax resident by either the 183 days rule or the 60 days rule.
How does the “60 days” rule applies?
An individual who in the relevant tax year:
- do not reside in any other country for a time period of more than 183 days(aggregate) and
- is not a tax resident in any other country and
- resides in Cyprus for at least 60 days and
- has various other Cyprus ties such as :
- contract of employment
- he is a business owner
- he is a director of a Cyprus Tax resident company.
The above must take place in a tax year and considered not valid in case of termination of employment during the tax year. In addition, the individual must maintain a residential property during the tax year either owned or rented.
Advantages of Cyprus Tax residents
- Income exemption for employment in Cyprus.
An individual with annual remuneration of more than €100.000 and who was not a tax residence in Cyprus before the employment, is entitled for 50% tax deduction on his income.
This deduction refers to income deriving from Cyprus and the rule is valid for a period of 10 years starting on the day of his employment.
- Exception from taxes on dividend income
Cypriot Non-Domiciled individuals are not subject to defence tax which means that worldwide dividend income is exempt from any taxation in Cyprus.
- Exception from defence tax on interest income
Cypriot Non-Domiciled individuals are not subject to defence tax which means that worldwide interest income is exempt from any taxation in Cyprus.
- Exception from defence tax on rental income
Cypriot Non-Domiciled individuals are not subject to defence tax which means that worldwide rental income is exempt from defence tax in Cyprus. However, rental income is subject to income tax.
Finally, Cypriot Non-Domiciled individuals are entitled to all other tax benefits of Non-Cypriot tax residents such as no capital gains on disposal of securities, access to Double Tax Treaties etc.
How can we help
We can assist with:
- Registration of your Company in Cyprus
- Assist in finding property to buy or rent in Cyprus
- Arrange employment agreement and relevant registrations to the social insurance department
- Registration of the individual to the immigration department and obtain the relevant “yellow” slip
- Application to the tax authorities to obtain the Cyprus Non-Domiciled status
- Assist on compliance with tax and other obligations for the individual and the Cyprus company
