Tax benefits of Cyprus

Tax Benefits for Individuals

Attractive Personal Income Tax Rates:

1. Tax-Free Income: The first €19,500 of annual income is completely tax-free.
2. Progressive Tax Rates: Subsequent income is taxed at progressive rates ranging from 20% to 35%, with the highest rate applying to income exceeding €60,000.

Higher Earnings Retention: This structure allows individuals to retain more of their earnings, contributing to a higher quality of life.

Tax Residency:

1. 183 Days Rule: Spend more than 183 days in Cyprus to be declared a tax resident.
2. 60 Days Rule: Alternatively, spend at least 60 days in Cyprus and meet other conditions to be a tax resident.

Capital Gains Tax Exemptions:

Real Estate and Assets: Capital gains from the sale of certain assets, such as real estate located outside of Cyprus, are generally exempt from capital gains tax, encouraging investment and allowing individuals to generate returns on their assets without incurring additional tax burdens.

Double Tax Treaties:

Extensive Network: Cyprus has treaties with over 65 countries, reducing rates of withholding tax on cross-border income and facilitating international business and investment activities.

Estate and Inheritance Tax Advantages:

No Inheritance Tax: Estate duty has been abolished since 2000, allowing wealth to be passed on to future generations without excessive tax burdens.

Gift Tax Exemption:

No Gift Tax: Cyprus has abolished gift tax, ensuring that gifts can be given without any tax implications, preserving wealth across generations.

Tax Benefits for Businesses

Low Corporate Tax Rates:

Competitive Rate: Cyprus boasts one of the lowest corporate tax rates in the EU at just 12.5%, attracting businesses seeking to optimize their tax obligations while operating within the EU market.

Taxation of Dividends:

Exempt Dividends: Exemption on dividends received from subsidiary companies, provided certain conditions are met, allows efficient repatriation of profits to Cyprus parent companies without further taxation.

Royalty Income Exemptions:

 IP Income: Royalty income from intellectual property like patents and trademarks is exempt from taxation, encouraging investment in research and development and fostering innovation within the country.

Intellectual Property Regime:

IP Tax Benefits: 80% exemption on net income generated from qualifying IP assets makes Cyprus an attractive destination for businesses involved in creating, holding, or maximizing IP.

Double Tax Treaties:

Business-Friendly Treaties: Similar benefits for businesses as individuals, eliminating double taxation and facilitating international trade and investment activities.

Loss Utilization and Carry Forward:

Loss Offset: Generous provisions for the utilization and carry forward of losses allow businesses to offset losses against future profits, minimizing tax liabilities during challenging periods.

Capital Gains Tax Incentives:

Tax Exemptions: Capital gains from the disposal of shares and the sale of immovable property located outside Cyprus are generally exempt from taxation, incentivizing businesses to engage in investment activities and expand their operations abroad.

Tax Benefits for Non-Dom Residents

This guide outlines key tax advantages that enhance investment returns and promote wealth preservation for international investors and expatriates, making Cyprus one of the best countries for tax residency.

Eligibility for Non-Dom Status

To qualify for Non-Dom status in Cyprus, you must:

Not be domiciled in Cyprus.

Be a tax resident of Cyprus, which requires spending more than 183 days per year in the country or following the 60-day rule under certain conditions.

The 60-Day Rule

The 60-day rule allows individuals to qualify as tax residents if they:

1. Do not reside in any other single country for more than 183 days.
2. Are not tax residents in any other country.
3. Spend at least 60 days in Cyprus.
4. Have other significant ties to Cyprus, such as owning or renting property, or running a business.

Generous Timeframe

Benefit: Non-Dom status grants you up to 17 years of these tax exemptions, making long-term planning and investment highly advantageous.

Low Personal Income Tax Rates

Benefit: Cyprus offers competitive personal income tax rates with significant allowances and deductions.

Impact: Non-Dom residents can benefit from lower tax rates on their personal income, enhancing their overall financial well-being.

Zero Tax on Worldwide Dividends

Impact: This allows you to enjoy your dividend income without any additional local taxation, significantly enhancing your investment returns.

Dividends: Enjoy 0% tax on worldwide dividend income, maximizing your investment returns.

No Tax on Interest Income

Benefit: Interest income earned by Non-Dom residents is also exempt from SDC.

Impact: You can maximize your interest earnings from savings and investments without the burden of extra taxes.

Interest: Benefit from 0% tax on interest income, ensuring your savings grow unhindered.

Exemption from Capital Gains Tax on Overseas Assets

Benefit: Non-Dom residents do not pay Capital Gains Tax on profits from the disposal of assets outside Cyprus.

Impact: This provides an excellent opportunity for international investors to manage and grow their wealth efficiently.

Worldwide Gains: Enjoy a complete exemption from capital gains tax on profits from the sale of securities, ensuring your investments are as profitable as possible.

No Inheritance Tax

Benefit: Cyprus has abolished inheritance tax

Impact: This ensures that your wealth can be transferred to your heirs without any local tax implications, preserving your family’s financial legacy.

Wealth Preservation: Secure your financial legacy with no taxes on wealth and inheritance, offering peace of mind for your family’s future.