An EU Solution for Individuals Seeking to Optimise Their Tax Exposure

Background

Cyprus has uniquely positioned itself as a tax jurisdiction of choice for individuals. Various positive aspects of Cyprus Income tax legislation are available to individuals seeking a flexible and attractive tax regime.

What makes Cyprus a jurisdiction of choice for individuals is the Non-domicile tax Regime which allows qualifying individuals to receive dividend and interest income exempt of income tax.  In addition individuals relocating to the island for the first time can benefit from reduced taxation on their employment income.

Day traders or individuals holding and managing their own investment portfolio can benefit extensively from the exemption of capital gains on the sale of equities.

The 60 day tax rule lends itself well for highly mobile individuals who travel extensively for work purposes and are not tied to one particular place of residence.

The tax benefits are further extended to individuals looking for a place to retire to.

Income Tax Reduction on Employment Income

Individuals who were not previously resident in Cyprus, take up residence in Cyprus for work purposes, and earn over €100,000 per annum, are entitled to an exemption from tax on 50% of the employment income earned in Cyprus. This employment income exemption is valid for up to 10 years.

Cyprus Tax Residency in 60 Days

An individual can become Cyprus tax resident in 60 days. This rule is applicable to individuals who do not spend more than 183 days in Cyprus or in any other jurisdiction.

The “60 day rule” applies to individuals who in the relevant tax year reside in Cyprus for at least 60 days, operate/run a business in Cyprus and/or are employed in Cyprus and/or are a director of a company which is tax resident in Cyprus.

Individuals must also have a residential property in Cyprus which they own or rent and are not be tax resident in any other country. The individual must not reside in any other single country for a period exceeding 183 days in aggregate.

Non-domicile Status

Individuals can acquire Cyprus tax residency after having complied with spending either 183 days or 60 days in Cyprus. Please contact the Dixcart office in Cyprus for further details about these two alternatives: advice.cyprus@dixcart.com

The Non-domicile tax regime is particularly interesting for individuals whose main source of income is either dividend income or Interest Income. In addition individuals can take advantage of the exemption of taxation on capital gains.

UK nationals and Other Non-EU Resident Applicants

Due to Brexit, UK nationals are now considered as non-EU nationals and therefore need to follow the same application procedure as other non-EU nationals:

Non-EU nationals and the Permanent Residence through Investment Programme

In order to acquire a permanent residence permit the non-EU national needs to make an investment of at least €300,000, (excluding VAT) in one of the following investment categories: residential real estate, other types of real estate such as offices, shops, hotels or investment in the share capital of a Cyprus company, or in units of a Cyprus Investment Organization of Collective Investments (type AIF, AIFLNP, RAIF). In addition, evidence of a secure annual income of at least €30,000 must be provided. This required annual income, increases by €5,000 for every dependant person, and by €8,000 for every dependant parent or parent-in-law.

  • Non-EU Nationals and Temporary Residence through a Foreign Interest Company

A Foreign Interest Company is an international company, which, subject to meeting specific criteria, can employ non-EU national employees in Cyprus.

This programme enables employees and their families to gain residence and work permits under favourable terms. The main requirements enabling an international company to qualify as a Foreign Interest Company are; all third country shareholder(s) must own more than 50% of the total share capital of the company, and there  must be a minimum investment of €170,860 into Cyprus by these third country shareholder(s). This investment can be used at a later date, to fund future expenses incurred by the company when it is established in Cyprus.

  • Temporary residence on a visitor basis without the right to undertake any form of employment

Non-EU nationals can acquire a temporary residence permit based on a visitor visa, which can be renewed for a period of up to 10 years.

This type of residence does not allow the undertaking of any form of employment.

This basis of residence is most suitable for pensioners wishing to establish themselves in Cyprus and enjoy the advantageous tax regime applicable to foreign pensions. Please contact the Dixcart office in Cyprus for more details: advice.cyprus@dixcart.com.

Additional Information

For additional information about the attractive tax regime for individuals in Cyprus, please contact: Robert Homem at the Dixcart office in Cyprus: advice.cyprus@dixcart.com.

Background

Cyprus has uniquely positioned itself as a tax jurisdiction of choice for individuals. Various positive aspects of Cyprus Income tax legislation are available to individuals seeking a flexible and attractive tax regime.

What makes Cyprus a jurisdiction of choice for individuals is the Non-domicile tax Regime which allows qualifying individuals to receive dividend and interest income exempt of income tax.  In addition individuals relocating to the island for the first time can benefit from reduced taxation on their employment income.

Day traders or individuals holding and managing their own investment portfolio can benefit extensively from the exemption of capital gains on the sale of equities.

The 60 day tax rule lends itself well for highly mobile individuals who travel extensively for work purposes and are not tied to one particular place of residence.

The tax benefits are further extended to individuals looking for a place to retire to.

Income Tax Reduction on Employment Income

Individuals who were not previously resident in Cyprus, take up residence in Cyprus for work purposes, and earn over €100,000 per annum, are entitled to an exemption from tax on 50% of the employment income earned in Cyprus. This employment income exemption is valid for up to 10 years.

Cyprus Tax Residency in 60 Days

An individual can become Cyprus tax resident in 60 days. This rule is applicable to individuals who do not spend more than 183 days in Cyprus or in any other jurisdiction.

The “60 day rule” applies to individuals who in the relevant tax year reside in Cyprus for at least 60 days, operate/run a business in Cyprus and/or are employed in Cyprus and/or are a director of a company which is tax resident in Cyprus.

Individuals must also have a residential property in Cyprus which they own or rent and are not be tax resident in any other country. The individual must not reside in any other single country for a period exceeding 183 days in aggregate.

Non-domicile Status

Individuals can acquire Cyprus tax residency after having complied with spending either 183 days or 60 days in Cyprus. Please contact the Dixcart office in Cyprus for further details about these two alternatives: advice.cyprus@dixcart.com

The Non-domicile tax regime is particularly interesting for individuals whose main source of income is either dividend income or Interest Income. In addition individuals can take advantage of the exemption of taxation on capital gains.

UK nationals and Other Non-EU Resident Applicants

Due to Brexit, UK nationals are now considered as non-EU nationals and therefore need to follow the same application procedure as other non-EU nationals:

Non-EU nationals and the Permanent Residence through Investment Programme

In order to acquire a permanent residence permit the non-EU national needs to make an investment of at least €300,000, (excluding VAT) in one of the following investment categories: residential real estate, other types of real estate such as offices, shops, hotels or investment in the share capital of a Cyprus company, or in units of a Cyprus Investment Organization of Collective Investments (type AIF, AIFLNP, RAIF). In addition, evidence of a secure annual income of at least €30,000 must be provided. This required annual income, increases by €5,000 for every dependant person, and by €8,000 for every dependant parent or parent-in-law.

  • Non-EU Nationals and Temporary Residence through a Foreign Interest Company

A Foreign Interest Company is an international company, which, subject to meeting specific criteria, can employ non-EU national employees in Cyprus.

This programme enables employees and their families to gain residence and work permits under favourable terms. The main requirements enabling an international company to qualify as a Foreign Interest Company are; all third country shareholder(s) must own more than 50% of the total share capital of the company, and there  must be a minimum investment of €170,860 into Cyprus by these third country shareholder(s). This investment can be used at a later date, to fund future expenses incurred by the company when it is established in Cyprus.

  • Temporary residence on a visitor basis without the right to undertake any form of employment

Non-EU nationals can acquire a temporary residence permit based on a visitor visa, which can be renewed for a period of up to 10 years.

This type of residence does not allow the undertaking of any form of employment.

This basis of residence is most suitable for pensioners wishing to establish themselves in Cyprus and enjoy the advantageous tax regime applicable to foreign pensions. Please contact the Dixcart office in Cyprus for more details: advice.cyprus@dixcart.com.

Additional Information

For additional information about the attractive tax regime for individuals in Cyprus, please contact: Robert Homem at the Dixcart office in Cyprus: advice.cyprus@dixcart.com.

Tax Benefits For Expatriates and High Net Worth Individuals Relocating to Cyprus

The Cyprus Investment Programme and the Benefits

Why Move to Cyprus?

Cyprus is an appealing European jurisdiction, located in the eastern Mediterranean Sea and offering a warm climate and attractive beaches. Situated off the southern coast of Turkey, Cyprus is accessible from Europe, Asia and Africa. Nicosia is the centrally located capital of the Republic of Cyprus. The official language is Greek, with English also being widely spoken.

Cyprus offers a palette of personal tax incentives for expatriates and high net worth individuals relocating to Cyprus.

Personal Taxation

  • Tax Residence in 183 days

If an individual becomes tax resident in Cyprus by spending more than 183 days in Cyprus in any one calendar year, they will be taxed on income arising in Cyprus and also on foreign source income. Any foreign taxes paid can be credited against the personal income tax liability in Cyprus.

  • Tax Residence under the 60 Day Tax Rule

An additional scheme has been implemented whereby individuals can become tax resident in Cyprus by spending a minimum of 60 days in Cyprus, provided that certain criteria are met.

  • Non-Domicile Tax Regime

Individuals who were not previously tax resident can also apply for non-domicile status. Individuals who qualify under the Non-Domicile Regime are exempt from tax on; interest*, dividends*, capital gains* (apart from capital gains derived from the sale of immovable property in Cyprus), and capital sums received from pension, provident and insurance funds. In addition, there is no wealth and no inheritance tax in Cyprus.

*subject to contributions to the national health system at the rate of 2.65%

Income Tax Exemption: Moving to Cyprus to Take up Employment

An exemption of 50% of employment remuneration is available to an individual employed in Cyprus who was resident outside Cyprus before he/she commenced employment in Cyprus. The exemption applies for a period of 10 years starting from the first year of employment in Cyprus, provided that the income from such employment exceeds €100,000 per year.

The Cyprus Action Plan for the year 2022, provides for the tax exemptions that currently apply to foreign highly skilled employees in the Republic, to be extended up to a maximum of 17 years.

The existing 50% tax exemption is also being extended to cover new resident employees, with an annual employment salary of €55,000 or more.

As of February 2022, the relevant legislation for the extended tax exemption is in the process of being submitted and approved.

Nil/Reduced Withholding Tax on Income Received from Abroad

Cyprus has more than 65 tax treaties that provide for nil or reduced withholding tax rates on; dividends, interest, royalties and pensions received from abroad.

Lump sums received as a retirement gratuity are exempt from tax.

In addition, a Cypriot tax resident, receiving pension income from abroad may choose to be taxed at a flat rate of 5%, on amounts exceeding €3,420 per year.

Additional Information

For additional information about the attractive tax regime for individuals in Cyprus, please contact Robert Homem or Charalambos Pittas at the Dixcart office in Cyprus: advice.cyprus@dixcart.com.

Introduction to Katrien de Poorter and Henno Kotze – Members of our DDL Team

Each of the Dixcart offices has a Dixcart Domiciles Team, providing advice regarding residence and/or citizenship programmes, and information on a number of tax efficient solutions that might be available.

Katrien de Poorter from our Cyprus office and Henno Kotze from our Dixcart office in Malta, are the two members of the team we are introducing to you today.

Dixcart Domiciles

Individuals and their families are becoming increasingly mobile, and Dixcart Domiciles, a business sector within Dixcart, specialises in residence and citizenship.

A number of countries offer attractive residence schemes and certain programmes offer the additional advantage of a passport.

Dixcart Domiciles offers specialist advice regarding various residence programmes around the world. We can help you discover the best country and programme for you and your family and provide advice on a number of tax efficient solutions that might be available. Dixcart Domiciles has its own website, which covers the programmes, the benefits, and financial obligations of each country in further detail.

Introduction to Katrien de Poorter and Henno Kotze

Katrien has been working in the fiduciary and wealth management sector since moving to Cyprus, as well as previously in in the United Arab Emirates. She also has close ties to other countries in the Middle East and  to Switzerland.

Henno was appointed Director of Dixcart Management Malta in 2018. He heads up the business development team, tasked with the continued expansion of this office and the promotion of Dixcart professional services available across the Group.

Katrien de Poorter

katrien.depoorter@dixcart.com

Katrien de Poorter has international experience in providing solutions to European and international clients and has a detailed understanding of the Cyprus Permanent Residence Programme which is available to non-EU nationals seeking to move to Cyprus.

Katrien advises clients on all aspects of relocating to Cyprus, including how to benefit from the advantageous non-domicile tax regime and the additional tax incentives that are available to Cypriot residents. Katrien also has experience in establishing and managing Cypriot companies once relocation has taken place, as a depth of knowledge regarding the establishment of Foreign Interest Companies allowing non-EU nationals to establish themselves in Cyprus.

Since moving to Cyprus, herself, she is able to draw on her own experiences in relocating to Cyprus, when advising clients embarking on the same journey, and is able to provide additional information on what it is like to live and work in Cyprus.

Henno Kotze

Henno Kotze

henno.kotze@dixcart.com

Director – Dixcart Management Malta Limited

Henno Kotze has expertise in providing international solutions to companies and individuals from several countries around the world and has a detailed understanding of the attractive residence programmes and tax regimes available to non-domiciled individuals in Malta.

Malta offers several residence and citizenship programmes and Henno has an in-depth knowledge of each of the programmes, including the benefits and financial obligations. He also specialises in international tax planning and structuring, establishing and managing Maltese companies, and has expertise regarding yachting and online gaming in Malta, as well as VAT.

Since joining Dixcart, Henno has advised many businesses relocating to Malta and has assisted a portfolio of clients wishing to obtain Maltese citizenship. He is on hand to meet clients in Malta, provide advice regarding the country and areas to live, assist with the documentation and application process of each programme, and advise on the legal aspects of relocating.

Availability Of Temporary Cyprus Residence Permits For Third Country National Employees Of Foreign Interest Companies

Moving Location – A Critical Time to Plan for Succession

This Article outlines the options available to third country nationals employed by foreign interest companies and the criteria that need to be met.

Key Feature of a Cyprus Foreign Investment Company

A Cyprus Foreign Investment Company (FIC), is an international company which can employ non-EU nationals in Cyprus. Such a company can obtain work permits for relevant employees and residence permits for their family members.

Main Advantages

A key advantage is that after 7 years, third country nationals can apply for Cyprus Citizenship.

In the shorter term:

  • FICs can employ third country nationals, who can apply for appropriate residence and work permits, each of which will be valid for up to 2 years and are renewable.
  • Employees can exercise the right for their families to join them in Cyprus.

Criteria to be Met

The requirements to be met are as follows:

  • The majority of the company’s shareholders should be foreign shareholders, and, in the situation where the ultimate owners are foreign companies, they must be  approved by the Civil Registry and Migration Department.

The following cases are exempt:

  • Public companies registered in any recognised stock exchange.
  • Former offshore companies that were operating in Cyprus by approval of the Cyprus Central Bank, before the change of their offshore status.
  • Cypriot shipping companies.
  • Cypriot companies of high technology/innovation, as certified by the Deputy Ministry of Research, Innovation and Digital Policy.
  • Cypriot pharmaceutical companies or companies operating in the fields of biogenetics and biotechnology.
  • Persons who have acquired Cypriot citizenship by naturalization based on economic criteria, and able to prove that they continue to meet all of the criteria.
  • Companies which employ staff from third countries for the first time must invest at least €200,000 in Cyprus, for the purposes of operating the company.
  • If the percentage of foreign participation in the share capital of the company is equal to or below 50% of the total share capital, this percentage must represent an amount equal to or greater than €200,000.
  • The company must operate independent offices in Cyprus, in suitable premises, separate from any private housing or other office, except in the case of business ‘co-habitation’.

EMPLOYEE CLASSIFICATION:

Eligible companies which fulfil the above conditions can employ third country nationals in the following positions:

  • Directors
    • this term includes directors or partners, general managers of branches and of parent companies of subsidiary companies, departmental managers, project managers.
    • the minimum acceptable gross monthly salary for directors is €4,000, an amount that may be adjusted from time to time, depending on fluctuations in the wage index.
    • there are no restrictions on the residence period of these employees.
  • Middle-management staff, executive staff and any other key personnel

In this category the following third country nationals are included:

  • Upper/middle management personnel,
  • Other administrative, secretarial or technical staff

The minimum acceptable gross monthly salary for this category is €2,000. Amounts may be adjusted from time to time, depending on wage index fluctuations.

  • Specialists

The minimum acceptable gross monthly earnings for Specialists is €2,000, an amount that can be adjusted from time to time, depending on fluctuations in the wage index.

  • Support Staff

This includes all third country nationals not included in the above categories. Companies are expected to fill positions in this category, with Cypriot or European citizens. Where there are no qualified Cypriots or European citizens available, a company may employ third country nationals up to a maximum 30% of the total staff.

For this category, the General Employment Procedure is followed, after  receipt of a positive recommendation (sealed employment contract) from the Department of Labour, which confirms that the approved maximum percentage above, has not been exceeded. Please contact the Dixcart office in Cyprus: advice.cyprus@dixcart.com for details of the certificates/supporting documents that need to be submitted.

The market test is not necessary for third country nationals with free access to the labour market.

Length of Validity of the Temporary Residence and Employment Permit

Where the criteria are met, the third country national is granted a temporary residence and employment permit. The validity of the permit depends on the duration of the employment contract and can be up to two years, with a right of renewal. Directors, middle management executives and other key personnel, as well as specialists (staff categories 1-3), may reside in the Republic without a time limit, provided they hold a valid temporary residence and employment permit.

For support staff, the restrictions applicable to the general employment of third country nationals in the Republic apply.

Family Members

Third country nationals with residence and employment permits, under staff categories 1-3 of the policy, have direct access to family reunification with their family members (spouse and minor children), provided that the relevant conditions of the Aliens and Immigration Law, Cap.105 as amended, are met.

In such cases, third country nationals who are family members (spouse and minor children) can enter and reside in Cyprus after the sponsor has followed the procedure for family reunification.

Additional Information

If you require any additional information, please speak to your usual Dixcart contact or to the Dixcart office in Cyprus: advice.cyprus@dixcart.com.

Cyprus, Malta, and Portugal – Three of the Best Southern European Countries to Live in

Moving to Guernsey – The Potential Tax Efficiencies

There are many reasons why individuals and their families choose to take up residence in another country. They may wish to start a new life elsewhere in a more attractive and relaxing environment, or they may find the greater political and economic stability that another country offers, of appeal. Whatever the reason is, it is crucial to research and plan ahead, as much as possible.

Residence programmes vary in what they offer and, depending on the country, there are differences regarding how to apply, the time period that residence is valid for, what the benefits are, tax obligations, and how to apply for citizenship.

For individuals considering an alternative country of residence, the most important decision is where they and their family would like to live. It is critical that clients consider the long-term objectives for themselves, and their families, before applying for a particular residence (and/or citizenship programme), to help ensure that the decision is right for now, and in the future.

The main question is: where would you and your family most like to live? The second, and almost equally important question is – what are you hoping to achieve?

CYPRUS

Cyprus has rapidly become one of Europe’s top hotspots for expatriates. If you are considering relocating, and are a bit of a sun-chaser, Cyprus should be top of your list. The island offers a warm climate, good infrastructure, convenient geographic location, membership of the EU, tax advantages for companies, and incentives for individuals. Cyprus also offers an excellent private healthcare sector, a high quality of education, a peaceful and friendly community, and a low cost of living.

On top of that, individuals are drawn to the island due to its advantageous non-domicile tax regime, whereby Cypriot non-domiciliaries benefit from a zero rate of tax on interest and dividends. These zero tax benefits are enjoyed even if the income has a Cyprus source or is remitted to Cyprus. There are several other tax advantages, including a low rate of tax on foreign pensions, and there are no wealth or inheritance taxes in Cyprus.

Individuals wishing to move to Cyprus can apply for a Permanent Residence Permit which is useful as a means to ease travel to EU countries and organise business activities in Europe. Applicants can make an investment of at least €300,000 in one of the investment categories required under the programme, and prove they have an annual income of at least €30,000 (which can be from pensions, overseas employment, interest on fixed deposits, or rental income from abroad) in order to apply for permanent residence. If they choose to reside in Cyprus for seven years, in any ten-calendar year period, they may be eligible to apply for Cyprus citizenship by naturalisation.

Alternatively, a temporary residence permit can be obtained by establishing a foreign investment company (FIC). This kind of international company can obtain work permits for relevant employees and residence permits for family members. Again, a key advantage is that after residing for seven years in Cyprus, within any ten-calendar year period, third country nationals can apply for Cyprus citizenship.

Find out more: Benefits, Financial Obligations, and Additional Criteria of the Cyprus Permanent Residence Permit


MALTA

Located in the Mediterranean, just south of Sicily, Malta offers all of the advantage of being a full member of the EU and Schengen Member States, has English as one of its two official languages, and a climate many chase all year round. Malta is also very well connected with most of the international airlines, which makes travel to and from Malta seamless.

Malta is unique in that it offers 8 residence programmes to meet different individual circumstances. Some are appropriate for non-EU individuals while others provide an incentive for EU residents to move to Malta. From the Malta Permanent Residence Programme, which offers a fast and efficient way for individuals to obtain a European permanent residence permit and visa-free travel within the Schengen Area, the Digital Nomad Residence Permit for third country individuals to legally reside in Malta but maintain their current job remotely, the Highly Qualified Person’s Programme, targeted towards attracting professional individuals earning over a certain amount each year offering a flat tax of 15%, to Malta’s Retirement Programme. It should be noted that none of the Malta residence programmes have any language test requirements – the Malta Government has thought of everyone.

  1. Malta Permanent Residence Programme – open to all third country, non-EEA, and non-Swiss nationals with a stable income and sufficient financial resources.
  2. Malta Residence Programme – available to EU, EEA, and Swiss nationals and offers a special Malta tax status, through a minimum investment in property in Malta and an annual minimum tax of €15,000
  3. Malta Global Residence Programme – available to non-EU nationals offers a special Malta tax status, through a minimum investment in property in Malta and an annual minimum tax of €15,000
  4. Malta Citizenship by Naturalisation for Exceptional Services by Direct Investment – a residence programme for foreign individuals and their families, who contribute to the economic development of Malta, which can lead to citizenship
  5. Malta Key Employee Initiative – is a fast track work permit application programme, applicable to managerial and/or highly-technical professionals with relevant qualifications or adequate experience relating to a specific job.
  6. The Malta Highly Qualified Persons Programme – available to EU nationals for five years (may be renewed up to 2 times, 15 years in total) and non-EU nationals for four years (may be renewed up to 2 times, 12 years in total). This programme is targeted at professional individuals earning more than €86,938 in 2021, and seeking to work in Malta in certain industries
  7. The Qualifying Employment in Innovation & Creativity Scheme – targeted towards professional individuals earning over €52,000 per annum and employed in Malta on a contractual basis at a qualifying employer.
  8. Digital Nomad Residence Permit – targeted at individuals who wish to maintain their current job in another country, but legally reside in Malta and work remotely.
  9. Malta Retirement Programme – available to individuals whose main source of income is their pensions, paying an annual minimum tax of €7,500

To make life even more enjoyable Malta offers tax benefits to expatriates and the attractive Remittance Basis of Taxation, whereby a resident non-domiciled individual is only taxed on foreign income, if this income is remitted to Malta or is earned or arises in Malta.

Find out more: A Snapshot of Malta’s Extensive Residence Programmes


PORTUGAL

Portugal, as a destination to relocate to, has been top of the list for several years now, with individuals attracted by the lifestyle, the Non-Habitual Resident Tax Regime, and the Golden Visa residency programme.

Portugal’s Golden Visa is the perfect route to Portugal’s golden shores. Due to its flexibility and numerous benefits, this programme has proven to be one of the most popular programmes in Europe – providing the perfect solution for non-EU citizens, investors, and families looking for Portugal residency, plus the option to apply for citizenship after 6 years if that is the long-term objective.

With changes soon approaching at the end of 2021, there has been a rapid uptake of more applicants in the last few months. Forthcoming changes include Golden Visa investors not being able to purchase properties in high-density areas such as Lisbon, Oporto, and the Algarve, which opens up greater opportunities for investors in Portugal. Alternatively, there are very attractive advantages in any one of the other non-real estate routes (more information can be found here).

Portugal also offers a Non-Habitual Residents Programme to individuals who become tax resident in Portugal. This allows them to enjoy a special personal tax exemption on almost all foreign source income, and a 20% tax rate for employment and/or self-employment income, sourced from Portugal, over a 10-year period.

Last but not least, following on from the restrictions caused by the pandemic and the significant increase of people no longer working in an office, Portugal offers a temporary residence visa that can be used by freelancers and entrepreneurs, which digital nomads can take advantage of. The local government in Madeira has launched the ‘Madeira Digital Nomads’ project, to attract foreign professionals to the island. Those taking advantage of this initiative can live in the nomad village in Ponta do Sol, in villas or hotel accommodation and enjoy free; wi-fi, co-working stations, and specific events.

The Golden Visa may seem less important for EU citizens, as they already have a right to live in Portugal without formal immigration or investment being required, but the NHR has proved to be a major motivator for both EU and non-EU citizens looking to relocate.

Find out more: From Portugal’s Golden Visa to the Non-Habitual Residents Regime


Summary

Moving Abroad? What to think about!

If you require additional information regarding moving to Cyprus, Malta, or Portugal, or would like to speak to an adviser to find out which programme and/or country best suits you and your family’s needs, we have staff located in each jurisdiction, to answer your questions:

What Are The Main Benefits Offered By The Cyprus Non-Dom Regime?

New “60 Day” Tax Residency Rule for Individuals in Cyprus

Cyprus offers; a warm climate, good infrastructure, convenient geographic location, membership of the EU, tax advantages for companies and incentives for individuals through the Cyprus non-dom regime.

Background

A tax law, approved by the Cyprus House of Representatives in 2015, provides significant benefits to individuals and to companies, relocating to Cyprus.

The Main Benefits

The main benefits of the legislation, in relation to individuals, include:

  • Special Defence Tax exemption for Cypriot non-domiciled tax residents;
  • Extension of the personal income tax reduction relating to the salaries of new residents.

Tax Exemptions Enjoyed by Tax Residents of Cyprus Who Qualify under the Non- domicile Tax Regime in Cyprus

As a result of previous tax legislation and the exemption from the Cyprus Special Contribution for Defence Tax (“SDC”) introduced in July 2015, non-domiciliaries are exempt from taxation in Cyprus on the following sources of income:

  • Interest;
  • Dividends;
  • Capital gains (other than on the sale of immoveable property in Cyprus);
  • Capital sums received from pensions, provident and insurance funds.

Capital Sums Remitted to Cyprus are Not Subject to Taxation

The tax benefits detailed above, are enjoyed even if the income has a Cyprus source or if it is remitted to Cyprus.

In addition there are NO wealth and NO inheritance taxes in Cyprus.

Other Beneficial Features of the Cyprus Tax System for Individuals

Income Tax Reduction for New Residents in Cyprus

Individuals who were not previously resident in Cyprus, take up residence in Cyprus for work purposes, and earn over €100,000 per annum, are entitled to the following tax benefit:

  • 50% of employment income earned in Cyprus is exempt from income tax for a period of 10 years.

Low Tax Rate: Foreign Pensions

The first €3,420 of a pension from employment outside Cyprus is tax free, and individuals can elect to pay only 5% income tax on pension income in excess of this amount.

Cyprus’ Standard Income Tax Rates are:

  • €0 to €19,500: 0%;
  • €19,501to €28,000: 20%;
  • €28,001to €36,300: 25%;
  • €36,301to €60,000: 30%;
  • Greater than €60,000: 35%;

The Definition of Residence and Non-Domicile in Cyprus for “SDC” Purposes

An individual is considered as tax resident in Cyprus if they spend more than 183 days in any one calendar year there. Prior to the introduction of the Non-domicile tax regime, income received by Cyprus tax residents from dividends, rent and interest, was subject to the Special Contribution for Defence Tax (SDC).

This is why the introduction of the “non-domicile” tax status was so important. The law of July 2015 specifies that tax resident individuals, who are non-Cyprus domiciled, are completely exempt from SDC irrespective of where their income is generated or remitted from.

  • The Cyprus non-domicile tax regime is therefore particularly interesting for individuals whose main source of income is either dividend or interest income. In addition, individuals can take advantage of the exemption from taxation on capital gains.

The Definition of Domiciled in Cyprus

 The term “domiciled in Cyprus” is defined by law as an individual who has a Cypriot domicile of origin, in accordance with the Wills and Succession Law, which is the domicile of his/her father at the time of his/her birth. Or alternatively, an individual who is considered a Cyprus tax resident, as per the Income Tax Law, for a period of at least 17 years out of the last 20 years before the relevant tax year, irrespective of his/her domicile of origin.

Summary

Non-domicile status in Cyprus offers a number of tax related benefits.

The regime, introduced in July 2015, offers additional financial incentives for individuals to consider Cyprus as an attractive destination for tax residence, and these incentives continue to be in place.

Additional Information

For further information about the attractive tax regime for individuals in Cyprus, please contact Robert Homem or Charalambos Pittas at the Dixcart office in Cyprus: advice.cyprus@dixcart.com.