Cyprus Tax Residency: Everything You Need to Know

If you are looking to relocate to Cyprus for employment, lifestyle, or business reasons, then this is for you! At RebaseCyprus, we specialise in helping immigrants conveniently move into the country and set up establishments stress-free.

We understand the intricate nature of relocating and trying to keep up with the taxes laws in new jurisdictions and make it easier for you. So, what do you need to know about Cyprus Tax Residency? Read on to find out.

2 Types of Tax Residencies in Cyprus

When compared to other European countries, the island  has one of the most straightforward systems for tax residency. It is based on the number of days you spend physically in the country. As an aspiring resident, you can apply as residents under the 183-day rule or the 60-day rule. There is also a non domicile tax status that a non-native Cypriot can enjoy (we’ll also discuss it below). Here is more information about the two.

1. The 183-Day Rule

This is the first rule and requires you to physically be present in the country for not less than 183 days during the country’s calendar year, which runs from 1st January to December 31st. Choose your preferred days to stay in the country and make sure they are at least 183 days (equivalent to around 6 months). The best thing about this rule is that they do not have to be consecutive days thus easier for you to align with your business needs.

2. The 60-Day Rule

As per this rule, you can become a permanent resident if you stay in the Republic for at least 60 days and do not stay in any other country for over 183 days. This provision prevents you from becoming a tax residence holder of another country.

You must also engage in business activities, be employed in the republic, or serve as a director of a company registered in Cyprus during the taxing year. As a director, you must prove your position by having a mandatory salary receipt for your residence.

During your stay, you must also have a permanent residence in the country as an owner or tenant and be registered with the local authorities. All these are manageable requirements you can fulfil as an employee or business person moving to Cyprus.

How to Calculate Your Days in the Republic of Cyprus

Now that you know the rules and the number of days, how do you calculate your days in the territory? Well, for the two rules, the calculation is on the entry and exit days via the recognised entry points.

These include:

• Larnaca (international airport and seaport)
• Paphos (international airport and seaport)
• Limassol (seaport)
• Latchi (seaport)

One day spent in the country is considered a day when you are physically present in the state, notwithstanding whether you left on the same day. Departure day, on the other hand, is considered a day outside the Republic regardless of whether you made a re-entry into the territory within the same day.

To show proof of your days spent, you will need passport stamps, boarding passes, and tickets for those using water transportation (seaports).

Non Domicile (Non-Dom) Status and What it Offers

Besides the two rules, the legislation also provides for non-domiciled resident benefits. As explained above, you must reside in the country for at least 60 or 183 days within a calendar year. Nevertheless, those who permanently reside in the country have a Domicile status while non-permanents have Non-Dom status thus eligible for non-domiciled residents.

For the so-called non-dom status, you must obtain a unique number from the responsible authorities. With this number, you can efficiently open bank accounts and run businesses within the territory. You must also prove to the authorities that you are not a Cypriot by descent.

This can only be done by sharing your parents’ birth certificates. It is important to note that generally, a native Cypriot is a domicile residence holder.

The non domicile Cyprus status will be granted to you if you haven’t resided in the country for 17 out of 20 years preceding the year in question.

As a Cypriot resident with a non domicile status, you are eligible for various exemptions and will not pay taxes for:

• Interest income
• Dividend income
• Rental income
• Capital gains

The Benefits of Obtaining Your Cyprus Tax Residency

1. Enjoy Low Taxation

Cyprus has some of the most attractive taxing rates and systems in the European Union for individuals and business entities. Cyprus is often misunderstood as an offshore territory, but it is actually a low-tax jurisdiction that fully complies with EU laws and international regulations. For instance, the tax rate is fixed at 12.5%, making it the lowest in the EU. All this makes the cost of living in Cyprus affordable for most people.

2. Significant Exemptions

According to the Cyprus Income Tax Law amendments, employees starting their first job in Cyprus from January 1, 2022, can receive a 50% tax exemption. This applies for up to 17 years, as long as their annual salary is over €55,000.

The exemption is designed to attract foreign professionals. Employees must have been non-residents of Cyprus for at least 10 years prior to starting their job. Even if the salary temporarily falls below €55,000, the exemption can continue if the salary met the threshold in the first or second year.

3. Operate with the Yellow Slip for Cyprus Tax Residency

The Yellow Slip allows you to have a legal resident status in the country. It means that you can work, have access to public healthcare, enrol in educational institutions, and enjoy a wide range of benefits just like a native Cypriot. With the Yellow Slip, you can also open bank accounts and obtain insurance for your property and assets.

How to Obtain Your Tax Residency Certificate (TRC)

A residency certificate is an important document for anyone with income from foreign countries. With this certificate, you can protect yourself from double taxation on your foreign income. Like other countries, we have a system of double taxation that allows legal Cypriot residents (receiving income from other countries) to only pay duties in the country.

This is a conventional agreement that has been embraced by over 67 countries across the globe. In this section, we give you a step-by-step guide for obtaining a TRC under the two rules.

Get Your TRC Under the 183-Day Rule:

• Register with the Authorities to get a Tax Identification Code (TIC)
• Fill out and submit the TD2001 form
• Sign a statement saying that you have intentions to stay in the country for over 183 days of the current taxation year.
• Provide evidence of your intention to stay in the country for not less than 183 days. This includes your employment contract, lease agreement, or property ownership documents (as per the Cyprus company formation laws).
• Provide evidence of all the foreign income you receive including interests, capital gains, and dividends.
• Submit your declarations for the past years (only applies if you were a tax residence owner)
• Pay all the required taxes
• Specify the country that needs the certificates

Get Your Residency Certificate Under the 60-Day Rule:

The process is quite similar to the 183-Day Rule as you need copies of your passport alongside the entry and exit stamps. You must also present a copy of your employment contract or corresponding documents to confirm your level of status as a director or company owner.

After this, you must sign a statement that indicates your clear intention to stay in the country for not less than 60 days of the current year.

Schedule Your Consultation with Us Today

As you can see, immigrating to Cyprus doesn’t have to be difficult. At RebaseCyprus, we offer a wide range of relocation services including company incorporation, immigration as well as provider-introductions.

All these set you up for success and a new life on a marvellously beautiful island. Simply schedule a consultation session with us and let us help you access all the services you need. Our relocation consultants will advise and monitor your entire procedure.

We are at your disposal for all matters relating to relocation to Cyprus. Our relocation consultants are local experts who will help you make a smooth transition to your new home.