Cyprus has rapidly become one of Europe’s top hotspots for expatriates. Why? The island offers a warm climate, good infrastructure, convenient geographic location, is a member of the EU, and offers a very attractive tax incentives for individuals, namely the Cyprus non-dom tax regime. What more could you want?
The island is dotted with incredible beaches, and it is not hard to find your own hidden gem, it is family-friendly due to the very low crime rate and has one of the best laid back lifestyles for those seeking the ‘ideal balance’. There is also an abundance of good restaurants and taverns and a cultural events calendar that will keep you entertained all-year round.
On top of that, Cyprus offers those who relocate to the sunny island an excellent private healthcare sector (with both public and private hospitals), a high quality of education, a low cost of living, and a reasonably priced real estate sector.
And what about the advantageous Cyprus non-dom tax regime?
This truly is the cherry on top of the cake. The Cyprus non-domicile tax regime allows Cypriot non-domiciliaries to benefit from a zero rate of tax on interest and dividends, even if the income has a Cyprus source or is remitted to 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.
In addition, there are NO wealth and NO inheritance taxes in Cyprus, and a low rate of tax on foreign pensions. The first €3,420 of a pension from employment outside of Cyprus is tax free, and individuals can elect to pay only 5% income tax on pension income in excess of this amount.
But it doesn’t stop there. There are additional beneficial features of the Cyprus tax system for individuals. This year (July 2022), an income tax reduction for new residents in Cyprus was introduced. A 50% exemption for income in relation to the first job or employment in Cyprus is available for individuals with annual income in excess of €55,000 (the previous threshold was €100,000). This exemption is available for a period of seventeen years.
For more information on the standard Income Tax rates in Cyprus, please refer to our article: What are the Main Benefits Offered by the Cyprus Non-Dom Regime?
So how to relocate to Cyprus?
Non-EU 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 must make an investment of at least €300,000 in one of the investment categories specified in 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.
Find out more about the various investment categories here: Benefits, Financial Obligations, and Additional Criteria of the Cyprus Permanent Residence Permit.
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.
If you would like more information about relocating to Cyprus, I would be delighted to meet with you, or arrange an online call. Please feel free to get in touch with Katrien de Poorter in our Cyprus office: firstname.lastname@example.org.