Are you considering relocating to Cyprus but worried about the tax implications? What if we told you that Cyprus offers significant tax benefits for non-domiciled individuals? Intrigued? Read on to discover how you can enjoy tax-free dividends, interest, and rental income with an unmatched quality of life.

Understanding Non-Domiciled Status

In Cyprus, being a non-domiciled individual means you are exempt from the Special Defence Contribution (SDC) Law, which taxes dividends, interest, and rental income for domiciled residents. To qualify as non-domiciled, you must be a tax resident of Cyprus but not have a domicile of origin or choice in Cyprus, unless you have not been a tax resident for at least 20 consecutive years.

Tax Benefits for Non-Domiciled Persons

As a non-domiciled tax resident in Cyprus, you can enjoy the following exemptions:

• Dividends and Interest: Normally taxed at 17%, these are completely exempt for non-domiciled individuals.
• Rental Income: While domiciled residents pay 3% on 75% of their gross rental income, non-domiciled individuals are exempt from this tax.

Residency Rules and the 60/183 Day Rules

Cyprus offers two pathways to tax residency:

• 183-Day Rule: Spend more than 183 days in Cyprus within a tax year.
• 60-Day Rule: Spend at least 60 days in Cyprus, not be a tax resident in any other country, and meet additional criteria such as employment or business activity in Cyprus and maintaining a permanent home in Cyprus.

Income Tax Rates and Exemptions

Cyprus offers a progressive income tax system with rates ranging from 0% to 35%. However, non-domiciled individuals can benefit from several exemptions:

• 90-Day Rule: 100% exemption on remuneration for services rendered outside Cyprus for over 90 days in a tax year.
• Lump Sum Payments: 100% exemption on lump sum payments from life insurance schemes or approved provident funds.
• Overseas Pensions: Exempt up to €3,420, with any excess taxed at 5%.

In a Nutshell

Cyprus provides a highly attractive tax regime for non-domiciled individuals, offering significant tax savings on dividends, interest, and rental income.

If you're also planning to set up a business in Cyprus, Mantle is the modern accounting and ERP suite to power your business operations end-to-end. Sounds interesting? Sign up