Cyprus Tax Residency and Non-Dom Rules: Unlocking Financial Opportunities
Cyprus, a picturesque Mediterranean island, not only offers stunning landscapes but also provides attractive tax residency and non-dom rules for individuals seeking to optimize their financial situation. With a range of benefits, clear requirements, and a well-defined procedure, Cyprus has emerged as a premier destination for individuals looking to establish tax residency and take advantage of non-domiciled status.
What Are the Benefits of Cyprus Tax Residency and Non-Dom Rules?
Attractive Tax Regime: Cyprus boasts one of the most favorable tax regimes in Europe, offering competitive tax rates, a wide network of double tax treaties, and exemptions on certain types of income, making it an attractive option for individuals seeking to optimize their tax liabilities.
Tax Exemption on Foreign Income: Non-domiciled individuals who become tax residents of Cyprus enjoy the benefit of tax exemption on foreign-sourced dividends, interest, and capital gains. This means that such income is not subject to taxation in Cyprus, providing significant tax planning opportunities.
Capital Gains Tax Exemptions: Cyprus provides exemptions on capital gains tax on the sale of qualifying assets, including shares, securities, and immovable property, under certain conditions. This favorable tax treatment can lead to substantial tax savings for individuals considering investments or asset disposals.
Wealth and Inheritance Tax: Cyprus does not impose wealth tax or inheritance tax, offering individuals the peace of mind of preserving their wealth for future generations.
Access to Double Tax Treaties: Cyprus has an extensive network of over 65 double tax treaties with various countries, ensuring that individuals can avoid double taxation and enjoy reduced withholding tax rates on cross-border transactions.
Requirements for Cyprus Tax Residency and Non-Dom Status:
Physical Presence: To qualify as a tax resident of Cyprus, an individual must spend more than 183 days in a calendar year in Cyprus. Special provisions may apply for individuals who do not spend the required number of days in Cyprus but can prove their ties to the country through other means.
Domicile Status: Non-domiciled individuals must provide evidence of their non-Cyprus domicile status, typically through the submission of relevant documentation and supporting evidence.
Intention to Reside: Individuals seeking tax residency in Cyprus must demonstrate a genuine intention to make Cyprus their place of permanent residence. This can be substantiated through various factors, such as property ownership, employment, and social ties.
Procedure for Obtaining Cyprus Tax Residency and Non-Dom Status:
Application Submission: The individual submits an application for tax residency to the Cyprus tax authorities, providing the necessary supporting documentation and evidence.
Review and Assessment: The tax authorities review the application, assess the individual's compliance with the residency and non-dom requirements, and conduct any necessary due diligence checks.
Issuance of Tax Residency Certificate: Upon approval, the tax authorities issue a tax residency certificate, confirming the individual's status as a tax resident of Cyprus.
Tax Planning and Compliance: Once tax residency is established, individuals can engage in strategic tax planning to maximize the benefits offered by Cyprus's tax regime. It is crucial to comply with the ongoing tax obligations, including the filing of annual tax returns and adherence to any relevant tax regulations.
The Fast Track Procedure
The optimal route is the Fast Track Procedure (Regulation 6, 2), with the Permanent Residency being granted within 2 months. The applicant must invest at least €300,000 in one of the following investment categories:
(A) Investment in a house/apartment: Purchase of a house or apartment from a development company, which should concern a first sale of at least €300,000 (plus VAT).
(B) Investment in real estate (excluding houses/apartments): Purchase of other types of real estate such as offices, shops, hotels or related estate developments or a combination of these with a total value of €300,000. The purchase of interest can be the result of a resale.
(C) Investment in Cyprus Company’s share capital, with business activities and personnel in the Republic: Investment worth €300,000 in the share capital of a company registered in the Republic of Cyprus, based and operating in the Republic of Cyprus and having a proven physical presence in Cyprus and employing at least five (5) people.
(D) Investment in units of Cyprus Investment Organization of Collective Investments (forms of AIF, AIFLNP, RAIF): Investment worth €300,000 in units of Cyprus Investment Organization Collective Investments.
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Explore your options in Cyprus. Read about the work & residence program for non EU investors. Contact us today, find out more and consider changing your environment.