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May 18, 2024
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Cyprus tax benefits for residents and non-tax residents

Cyprus has an appealing tax system for both residents and non-tax residents. There is the lowest taxation in the EU for all resident-based companies, which is 12,5%. Non-resident companies are exempt from this tax.

There are also various exemptions: for example, if your annual taxable income amounts to €19,500 or less, you are exempt from personal taxation.

Read the complete guide to taxation in Cyprus, exemptions, and benefits.

Albert Ioffe
Albert Ioffe

Told about the Cypriot tax policy for residents and exemptions for non-residents

What taxes should foreigners pay in Cyprus?

Cyprus tax benefits for residents and non-tax residents

Cyprus tax system

Cyprus’ taxation system obliges its tax residents to pay a specific set of taxes, including income taxation on their worldwide income, regardless of their residence status.

Foreigners who spend more than 183 days in the country usually become its tax residents: they pay taxes and receive benefits. The Government of Cyprus has simplified this rule: people who want to become tax residents of Cyprus can now stay in Cyprus for at least 60 days during the tax year instead of 183.

60 days

A foreigner can stayin Cyprus to be a tax resident

The 60-day rule provides for five requirements:

  1. Do not reside in any other country longer than 183 days.

  2. Not to be a tax resident of other states during the tax period.

  3. To carry out any activity in Cyprus, for example, to have a job in Cypriot companies.

  4. Own residential real estate in Cyprus.

Cyprus provides its citizens and expatriates with excellent taxation policies and incentives. To be a tax resident, foreigners can have a permanent residence by investing in real estate or funds.

A person who is a non-tax resident is only taxed on income arising from sources in Cyprus.

A company can be considered a tax resident when managed or controlled from Cyprus.

Personal taxation

Cyprus-tax residents must pay general and foreign taxes on their income worldwide at tax rates ranging from 20—35%, depending on their annual income. If your annual taxable income amounts to €19,500 or less, you are exempt from this tax.

Personal income tax rates

Taxable income band

National income tax rates

€0 to €19,500

0%

€19,501 to €28,000

20%

€28,001 to €36,300

25%

€36,301 to €60,000

30%

€60,000+

35%

There is a special regime for retirees: 5% of the pension payments if they exceed €3,420 per month.

Taxes on corporate income

Cyprus tax-resident companies are taxed on their income from all sources in the country and abroad. The standard corporate income tax, or CIT, is 12,5%. Non‑Cyprus tax resident companies are exempt from CIT tax.

12.5%

CIT for Cyprus tax-resident companies

Taxes for insurance companies. These companies are required to pay corporate tax as other tax-resident companies. However, there is an exception when the corporate tax payable on the taxable profit of a life insurance business is less than 1,5% of the gross premium. In this case, the difference is paid as an additional corporate tax.

Taxes for shipping companies. Fully approved by the EU, the Cyprus Merchant Shipping Legislation provides an exemption from all taxation under the tonnage tax regime of qualifying ship owners and managers.

Value-added tax rates

The value-added tax, or VAT, is charged on the supply of services and goods in Cyprus, the importation of goods into Cyprus, and the acquisition of goods from the EU. The standard VAT rate is 19%.

19%

The standard VAT rate in Cyprus

Cyprus also has a 9% reduced VAT rate on a restaurant, catering services, accommodation, hospitality, and other services.

A 5% reduced VAT rate applies to the renovation and repair of a property.

Property taxes in Cyprus

Stamp duty. This tax is determined depending on the purchase amount:

  • stamp duty is not charged for the first €5,000;

  • 0,15% for the purchase price from €5,001 to €170,000;

  • 0,2% for the purchase price over €170,000.

Property transfer tax. When you buy a property in Cyprus, you must pay a transfer tax to complete the purchase. The Land Registry will assess the market value of the purchased property and charge the buyer transfer fees.

Transfer fees are the following:

  • 3% on real estate worth up to €85,000;

  • 5% if a property costs from €85,001 to €170,000;

  • 8% if a property price exceeds €170,001.

There is a 50% discount on stamp duty, and transfer fees are not chargeable if VAT has been paid.

Services taxes. The Municipality or a Village Council determines the tax and rates for property owners. The cost will depend on the municipality or council where the object is located.

Capital gains tax. A 20% capital gains tax, or CGT, is charged on income from selling immovable properties in Cyprus or shares of companies that directly own real estate objects in Cyprus. This tax only applies to profit from selling an immovable property when the disposal is not subject to income tax.

Individual cost calculation of the Cyprus permanent residence

Individual cost calculation of the Cyprus permanent residence

Special contribution to the defence

The Defense Tax, or a Special Tax Contribution for Defense Purposes, consists of three parts:

  • a tax on dividends received in Cyprus and abroad;

  • a tax that consists of interest income earned in Cyprus and abroad;

  • capital gains from the sale of securities and corporate rights.

A non-domicile tax resident is exempt from paying defence tax.

Tax calendar

You can check a tax calendar to pay all taxes on time, be up-to-date, and avoid paying unnecessary penalties.

Tax due dates for individuals and companies

Date

Requirements

Form

January 31st

Submission of the Deemed Dividend Distribution declaration

TD623

April 30th

Provide payment of premium tax for life insurance companies

TD199

May 31st

Employees must provide electronic submission of the revenue for the previous year

TD7

June 30th

Pay for Special Contribution for Defence and General Health Contribution for the first six months of the year on rents

TD601

July 31st

Provide electronic submission of the previous year on personal tax return

TD1

August 1st

Companies and individuals submitting audited financial statements should pay the tax balance for the previous year

IR158

December 31st

Pay for a Special Contribution for Defence and General Health Contribution on interest, rental, or dividend income

TD601

End of each month

Pay for Social Insurance and General Healthcare Contributions withheld from employees’ emoluments during the last month

TD601

Pay tax withheld in the previous month on payments to tax residents who are not citizens of Cyprus within the previous month

TD11

By the 10th of the second month following the end of the quarter

Self-employed individuals must submit and pay for their Social Insurance Contributions

By the 10th of the second month after the end of the VAT period

Submit VAT declarations and payment of VAT amount due

By the 10th of the month following the end of the VAT period

Submit Intrastat form, or Intra-EU Trade Statistics, electronically

Tax exemptions for non-Cyprus residents

Cyprus’ taxation system offers numerous exemptions and benefits for non-residents on capital gains, employment income, VAT exemptions, and many others.

For example, non-Cyprus residents are exempt from tax on interest, dividends, and royalties in the whole amount. Non-residents are also exempt from income taxes on the sale of securities and capital sums accrued to individuals due to any payments to approved funds.

Valid double taxation treaties

Cyprus has double tax treaties with more than 50 countries. Most of these countries follow the OECD Model Convention, but a tax treaty with the United States is also adapted to the US Agreements.

Valid double taxation treaties

Azerbaijan

Germany

Malta

Slovakia

Armenia

Greece

Mauritius

Slovenia

Austria

Hungary

Moldova

South Africa

Belarus

Iceland

Montenegro

Spain

Belgium

India

Norway

Sweden

Bulgaria

Iran

Poland

Syria

Canada

Ireland

Portugal

Tajikistan

China

Italy

Qatar

Thailand

Czech Republic

Jersey

Romania

Ukraine

Denmark

Kuwait

Russia

United Kingdom

Egypt

Kyrgyzstan

San Marino

United States of America

Estonia

Lebanon

Serbia

Finland

Lithuania

Seychelles

France

Luxembourg

Singapore

How to obtain permanent residency in Cyprus by investment to become a tax-resident

The Cyprus tax policy is softer than in many countries, so numerous business owners and individuals choose this country as their residence. Participating in the investment program is the fastest way to get a Cyprus permanent residency.

The Government of Cyprus has launched a program that allows foreigners to get permanent residency by investment. The minimum investment amount is €300,000.

You can invest in residential property, commercial real estate, local investment fund units, or Cypriot companies shares. Five years after receiving the residency, you can apply for citizenship.

Buying a residential property. Foreigners can buy one or two properties for €300,000+ in new buildings. They also have to pay a value-added tax of 19%; if housing is purchased for their own usage, the VAT is 5%.

Investing in commercial real estate. Foreigners can buy one or two commercial objects for €300,000+ in new buildings or the secondary market.

Buying units of local funds for at least €300,000 and only from collective investment funds of the RAIF, AIF, and AIF LNP types.

Purchasing shares of Cypriot companies for €300,000 and more, which have five employees and make a profit on the island.

Immigrant Invest is a licensed agent for citizenship and residence by investment programs in the EU, the Caribbean, Asia, and the Middle East. Take advantage of our global 15-year expertise — schedule a meeting with our investment programs experts.

Will you obtain Cyprus permanent residence?

Practical Guide

Will you obtain Cyprus permanent residence?

Frequently asked questions

  • Does Cyprus have low taxes?

    Cyprus has the lowest corporate income taxation in the EU for resident companies, which is 12,5%. Non-tax residents do not pay this tax. If your annual taxable income is €19,500 or less, you are exempt from tax on personal income.

    Cyprus also has many benefits and tax treaties due to interest, dividends, royalties, and pensions.

  • Is Cyprus a tax haven?

    Cyprus lost tax haven status. One of the reasons — is the increase in corporate tax rates to 12,5%.

  • Do expats pay taxes in Cyprus?

    Cyprus’ Taxation System obliges its tax residents to pay a specific set of taxes, including income taxation on their worldwide income, regardless of their residence status. A person who is a non-tax resident is only accessible on income arising from sources in Cyprus.

  • How much is income tax in Cyprus?

    Cyprus-tax residents pay general and foreign taxes on their income worldwide at tax rates ranging from 20‑35%. Companies pay a corporate income tax of 12,5%. There is a special regime for retirees: 5% of the pension payments if they exceed €3,420 per month.

  • Who pays income tax in Cyprus?

    Cyprus-tax residents and companies that operate in Cyprus pay income tax. Non-tax residents are exempt from paying income tax. Retirees provide 5% of the pension payments if they exceed €3,420 per month.

  • Do you pay hotel taxes in Cyprus?

    There is a 9% VAT rate applied to accommodation and hospitality services.