Individuals who are planning to relocate or move their personal tax residency to Cyprus will find that there are significant financial advantages. As with any type of wealth plan, the starting point is understanding the rules and then establishing how you can use them to your advantage, so let’s explore some of the key financial benefits of living in Cyprus.
12.5% Flat Corporation Tax Rate
Promoting strong and sustained economic growth, the corporation tax in Cyprus is one of the lowest in Europe at a fixed, flat rate of 12.5% on business profits, which can be reduced further through the use of double tax treaties. It is also important to note that Cyprus has an attractive double tax treaty network covering more than 60 countries across the globe.
35% or 0% Income tax
An individual who is a tax resident in Cyprus is taxed on his/her worldwide income (all income sources in both Cyprus and abroad). More specifically, the income of up to €19,500 is tax-free. Tax rates then start at 20% and rise progressively to 35% for income over €60,000.
It is noteworthy that income tax exemptions also apply for non-Cypriot individuals relocating to Cyprus under the 60 or 183 day rule. Tax residency can be obtained if you:
- Spend at least 183 days of the year in the country.
- If you are planning to spend less than 183 days of the year in the country, you can still qualify for a tax status, provided that: you are not a tax resident in any other country; spend at least 60 days in Cyprus and not more than 183 days in any other country; maintain a permanent home in Cyprus (rented or owned); are employed or operate a business in Cyprus and/or hold an office in a Cyprus tax resident company.
In this way, NON DOMICILED Cyprus tax residents will be able to gain from further tax exemptions and not pay tax on income derived from investment income (e.g. dividends).
Zero Inheritance tax
Unlike many other countries, Cyprus does not impose inheritance, gift or donation tax which makes it an attractive jurisdiction to secure the future and well-being of your family.
Individuals who are thinking of relocating or moving their personal tax residency to Cyprus will gain a lot in terms of tax incentives and benefits. The tax system in Cyprus is favourable to say the least, but shifting through and understanding the Cypriot tax legislation can sometimes seem daunting.
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Want to find out more about how the tax legislation works in Cyprus? Contact us and one of our tax specialists will be happy to assist you.