Tax Residency Rules in Cyprus: Understanding Key Points

Tax residency in Cyprus is an attractive status for expatriates and individuals looking to optimize their global tax obligations. It is also a requirement in order to be able to obtain the non-dom status.

Under Cyprus tax law, an individual is considered a tax resident if one:

1. spends over 183 days in the country within a calendar year; or

2. they 60-day rule applies provided they meet all the specific conditions associated with this rule, such as:

   
   

   i. Stay in Cyprus for at least 60 days during the tax year

   ii. Do not spend more than 183 days in any other country during the tax year.

   iii. Are not a tax resident in any other country during the tax year.

   iv. Maintain a permanent residence in Cyprus, which can be either owned or rented.

   v. Engage in business activities, are employed, or hold an office in a company that is tax resident in Cyprus at any time during the tax year.

   
   

Once tax residency is established, Cyprus offers numerous advantages, making it an ideal place to manage multiple income sources across different countries including:

• a corporate tax rate of 12.5%, one of the lowest in Europe

• extensive network of Double Taxation Treaties (DTTs), ensuring individuals don’t pay taxes on the same income twice in different countries.

This setup is particularly beneficial for expatriates and international investors looking to legally minimize their tax burden while enjoying a high standard of living in Cyprus.

Moreover, income earned abroad by a Cyprus tax resident is subject to special provisions, often resulting in lower overall taxation.

For expatriates, maintaining tax residency in Cyprus ensures that they can continue benefiting from these favorable tax rates, making it essential to understand and follow the rules for establishing and retaining tax residency status.