Cyprus Taxes for Non-Residents: Benefits, Exemptions & More

With incredible incentives under its “Cyprus Tax for Non-Residents” legislation, Cyprus is known worldwide as an investment hub.

The country has built itself into a tax haven for foreign investors, with a particular focus on appealing to Russian oligarchs and Eastern European citizens and organizations. This has attracted many high-net-worth individuals to seek permanent residence in the nation.

Navigating the Cyprus tax landscape can be complex, so we’ve created this ultimate guide that covers:

• Overview of the taxes in Cyprus
• The tax benefits offered by Cyprus
• Cyprus tax for non residents, and more!

General Taxes in Cyprus

Cyprus’ Taxation System imposes a specific set of taxes on all of its tax residents, and subjects them to income taxation on their worldwide income regardless of their domicile status. The Cypriot tax authorities provide certain exemptions and allowances for their residents and non-tax residents. For example, if an individual’s annual taxable income amounts to €19,500 or less, it’s considered exempt from taxation. Another example is the exemption of non-domiciled residents from paying taxes on income accrued from dividends and capital gains.

With those exemptions aside, the general taxes that have to be paid to the Cypriot tax authorities are:

• Personal Income Tax (PIT)
• Special Defense Contribution (SDC)
• Social Security Contributions
• General Health System (GHS)
• Capital Gains Tax (CGT)
• Consumption Taxes – or Value-Added Taxes (VAT)
• Immovable Property Transfer Fee
• Immovable Property Transfer Levy (IPTL)
• Immovable Property Tax (IPT)

Cyprus Non-Resident Tax Eligibility: The 183 and 60 Day Rules

Cypriot income tax legislation determines tax residency based on an individual’s residence status, deeming any individual who spends more than 183 cumulative days in one calendar year in the Republic is a resident of Cyprus and a person tax resident in the country.

On July 14, 2017, the Cypriot Parliament amended Section 2 of their Income Tax Law (ITL) regarding tax residency to state that individuals may also be viewed as Cyprus tax residents provided they fulfill the “60-day rule” criteria. The amendment was deemed effective in January.

The 60-day rule applies to anyone who resides in Cyprus for at least 60 days in a Cypriot tax year – between January 1 and December 31 – and meets the following criteria:

• Doesn’t spend over 183 cumulative days that year in another country
• Isn’t considered a tax resident in another country
• Maintains a permanent home in the Republic (owned or rented)
• Conducts business activity in Cyprus (as a business owner or an employee)
• Has other defined ties to Cyprus

If the individual’s employment, business, or holding of an office is terminated during that year, they would no longer be considered a Cyprus tax resident as of that same tax year.

Cyprus Taxes 2024: Calculating Days In and Out of Cyprus

For a person to determine whether their income falls under the taxation category of ‘income tax in Cyprus for expats,’ or ‘income tax in Cyprus for residents,’ they would have to combine the total amount of days they have stayed in the country that year, following this calculation format:

• The day of arrival in Cyprus counts as a day of residence
• The day of departure from Cyprus counts as a day of non-residence
• Arrival in and departure from Cyprus on the same day counts as a day of residence
• Departure from and arrival in Cyprus on the same day counts as a day of non-residence

Cyprus Income Tax for Non-Residents

Tax residents of Cyprus have to pay general and foreign taxes on their worldwide income at established tax rates ranging from 20 percent to 35 percent, depending on their annual earnings. Non-residents are subject to taxation only on income they accrue from Cypriot establishments, or any business conducted in the Republic.

Cyprus Tax Exemptions for Non-Residents

Non-residents of Cyprus are provided with several exemptions and incentives to retain their operations and investments in Cyprus, including exemptions on employment income, exemptions on capital gains, and VAT exemptions.

Expats relocating to Cyprus are eligible for one of two income tax exemptions on their first Cypriot employment income, regardless of their residency or domicile status. They are:

The 50% tax exemption rule

The 50 percent exemption on remuneration exceeding €55,000 per annum gained from any employment exercised in Cyprus. This exemption is applicable for 17 years, starting from the individual’s first year of employment in Cyprus, provided that they:

• Were a non-resident of Cyprus prior to the commencement of their employment;
• Haven’t been a tax resident of Cyprus the year prior to their employment;
• Haven’t been a tax resident for three or more tax years out of the five Cyprus tax years immediately prior to their employment.

The 20% tax exemption rule

If you start working in Cyprus for the first time but don’t qualify for the 50% tax exemption under Article 8(23A), you might still be eligible for a 20% tax exemption on your income or €8,550, whichever is lower. This exemption lasts for 7 years, starting from the year after you begin working in Cyprus. The 20% tax exemption is only applicable if:

• The applicant has worked outside of Cyprus for a non-Cypriot employer for at least 3 consecutive years before starting their job in Cyprus.

Other tax exemptions for non-tax residents in Cyprus

Exemptions for salary generated overseas

If you work for more than 90 days in a year outside of Cyprus, and your employer is either not based in Cyprus or is a permanent overseas branch of a Cyprus-based company, the income you earn during that time is fully exempt from Cyprus’ personal income tax.

Dividend and interest income exemptions

Cyprus has tax treaties with over 65 countries that offer nil or reduced withholding tax rates on all dividends, interest income earned, royalties, and pensions received from foreign organizations and businesses. Cyprus tax rates for foreigners from a country which has such a tax treaty varies based on the treaty in place. Those from countries with a nil tax rate, regardless of their tax residency status in Cyprus, are exempt from paying the Cyprus dividend income tax on profits arising out dividends and interests.

Capital gains exemptions

The Cyprus capital gains rate is 20 percent on gains that arise from the disposal of any immovable property located in Cyprus, including that of shares in companies that directly own those properties. There are, however, many instances where the disposal of immovable property isn’t subject to the Cypriot Capital Gains Tax.

The exemptions for capital gains tax in Cyprus for non-residents include:

• Land, as well as land with buildings, acquired at market value from unrelated parties anytime between July 16, 2015 and December 31, 2016, are exempt from CGT upon their disposal. This exemption excludes exchanges, donations and foreclosures.
• Income generated from the disposal of shares, bonds, or other similar financial investments by a non-Cypriot resident is exempt from taxation.
• Gifts between parents and children, spouses, or relatives up to the third degree.
• Gifts to a company where the shareholders are all members of the donor’s family, on the condition that they remain to be so for five years after the date of transfer.
• Gifts by a family company to its shareholders, on the condition that the property was originally acquired by way of gift, and that it is kept by the new shareholder for at least three years.
• Gifts to the government
• Donations to charities
• Donations to political parties
• Transfer of property arising on the occurrence of death.
• Transfers of property arising from internal reorganizations.
• Exchange or disposal of property under the Agricultural Land Consolidation Laws, with the exemption including gains accrued from an exchange of property that is used to acquire new property. In case a new property is acquired, the tax would be implemented upon the disposal of that new property.
• Disposals arising from expropriations.
• Disposals of non-Cypriot real estate.

Value Added Tax (VAT) exemptions

The Cyprus VAT rate is 19 percent. However, there are certain goods and services in Cyprus that are tax-exempt from VAT, and they include:

• The leasing of residential buildings for longer periods. This does not include short term rentals e.g., holiday accommodation.
• Most financial, insurance, and banking services. However, certain advisory services are subject to VAT in Cyprus.
• Most medical, hospital and dental care services as long they are licensed and authorized practitioners.
• Certain educational, cultural, and sports activities
• Supplies for second-hand buildings
• Postal services provided by Cyprus’ national postal authority. This does not apply to private courier services.
• Betting coupons for horse racing and football, as well as lottery tickets
• Management services provided to mutual funds

Further exemptions

The Cyprus Income Tax Law provides other exemptions for residents and non-residents, including exemptions from:

• Estate duty tax
• Wealth tax
• Gift tax
• Inheritance tax
• Lump sum received from a retiring gratuity
• Lump sum received from commutation of pension
• Lump sum received as compensation for a death or an injury

Taxation in Cyprus Benefits

Benefits for monetary migrants

Cyprus’ Tax for Non-Residents acts as a huge benefit to those who move around a great deal, or aren’t residents anywhere in the world – otherwise known as ‘monetary migrants’. It gives them a perpetual base in which they can invest their finances.

Double tax treaties in Cyprus

The double tax treaties in Cyprus enable individuals to bypass paying taxes twice on the same taxable income by considering the individual’s domicile, regardless of their residence status.

While the Republic doesn’t provide a direct residency by investment program, the Cyprus Golden Visa offers a way for investors to contribute to the Cyprus economy, obtain permanent residency, and apply for citizenship by naturalization. Investors and their family members can obtain a permanent residency in Cyprus for a minimum investment value of €300,000. This provides them with full residency rights in Cyprus and visa-free travel across the European Schengen Zone and 142 other countries.

The Golden Visa Program allows investors to become tax residents of Cyprus, bypassing the need to pay double tax in their home country and new country of residence. However, dual citizenship is possible in Cyprus, so speaking with a tax immigration expert is recommended for all tax matters to ensure you’re taking the correct route for taxes in Cyprus.

Real estate returns

Although the cost of living in Cyprus may differ from one individual to another, those who don’t seek to live in the country and only invest in it may be pleased to learn about the returns on real estate in Cyprus. While the tax benefits for non-residents in Cyprus are fantastic, they’re not alone. If you’re looking for a way to get a return on your money, investing in Cyprus real estate is one of the top ways to get your Cyprus investment portfolio going.

Overseas pensions

For retirees living in Cyprus, life is laid back and full to the brim with sunshine and endless opportunities to explore the incredible culture and natural splendors Cyprus has to offer. If you are a retiree in Cyprus, your overseas pension is tax-exempt up to €3,420. Thereafter, a five percent tax rate applies. Retirees have the option to choose whether they are taxed in this way or under the general income tax method each year. It’s best to speak with an immigration tax specialist to find out which Cyprus tax category suits your needs better.

Low personal income rates

When looking at the personal income tax rates in Cyprus compared with other EU countries, tax residents and non-Cyprus residents will be pleased to know that their personal income tax is much lower than in other countries in the European Union. For example, looking at taxes in Greece, taxable income starts at €0-€10,000 (9 percent). Compared with Cyprus, that only starts taxing income at €19,500-€28,000 (20 percent). The next tax bracket for Greece is also at 20 percent for €10,001-€20,000. This means the starting point for Cyprus income tax is lower, offering a benefit to those whose incomes don’t hit the €19,500 point.

But that comparison isn’t anything compared to countries with the highest taxes. For example, the Ivory Coast has a 60% individual income tax rate, with Finland not far behind at 56.95%.

How Can Global Citizen Solutions Help You?

Global Citizen Solutions is a boutique migration consultancy firm with years of experience delivering bespoke residence and citizenship by investment solutions for international families. With offices worldwide and an experienced, hands-on team, we have helped hundreds of clients worldwide acquire citizenship, residence visas, or homes while diversifying their portfolios with robust investments. 

We guide you from start to finish, taking you beyond your citizenship or residency by investment application. 

Frequently Asked Questions about Cyprus Tax for Non-Residents

Are Cyprus taxes high?

No, taxes in Cyprus are relatively low, especially when compared to other EU countries. For example, in Greece, personal income tax starts at 9% on income as low as €0-€10,000. In contrast, Cyprus only starts taxing personal income at €19,500.

This means that if your income is below €19,500, you won’t pay any income tax in Cyprus. Even if you earn more than that, Cyprus’ tax rates remain competitive, making it a tax-friendly option for residents and non-residents alike

Does Cyprus have income tax?

Cyprus taxes on salary for tax residents varies. Tax residents pay general and foreign taxes on their worldwide income at tax rates ranging from 20 percent to 35 percent, depending on their annual income. Non residents are subject to taxation only on income they accrue from Cypriot establishments or any business activity conducted in Cyprus, and can benefit from exemptions.

Do non-residents pay taxes in Cyprus?

You are only subject to taxation in Cyprus on chargeable income you accrue from Cypriot establishments, or any business conducted in the Republic. You aren’t required to file a personal tax return unless you have income arising from sources within Cyprus.

Non-tax residents of Cyprus can also benefit from exemptions and double taxation treaties.

Do non-residents of Cyprus pay tax on rental income from Cypriot properties?

Those who aren’t residents of Cyprus are subject to a 20 percent income tax on gross rental income arising from Cypriot properties.

To ensure compliance with rental income tax policy, keep accurate records of all rental income and expenses, file tax returns on time, and seek professional tax advice when needed.

How much is income tax in Cyprus for tax residents?

Individuals who are considered Cyprus tax residents are subject to income tax on both their domestic and international earnings at rates that range from 20 percent to 35 percent. Corporate entities are liable for a corporate income tax set at 12.5 percent. A unique tax scheme is in place for retirees; they’re taxed on only 5 percent of their pension income if it exceeds €3,420 per month.

As a non-resident, do I need to file audited financial statements?

Non-resident individuals aren’t generally required to file audited financial statements with the Cypriot tax authorities; they’re only taxed on income derived from sources within Cyprus, and this income typically isn’t subject to audit.

However, there are a few cases where a non-resident individual may be required to file audited financial statements, such as if they are considered to have a permanent establishment in Cyprus.

In these cases, the audited financial statements would be used to verify the individual’s income and ensure that they are complying with Cypriot tax laws.

What is the corporate tax rate in Cyprus for 2024?

Cyprus tax resident companies are taxed on all income sources within the country and abroad. The Cypriot government raised their corporate tax rate to 12.5 percent in 2019, which is still low compared to corporate tax rates in most European countries.

Is Cyprus a tax haven?

Cyprus offers tax residents and non-tax residents a range of enticing tax benefits. For these reasons it is considered a tax-friendly jurisdiction, but not a tax haven in the traditional sense. The country complies with all international standards and EU regulations.

How does the Cyprus tax system work for individuals and businesses?

Companies pay a corporate income tax set at 12.5%, while individual tax residents pay foreign and general taxes on all worldwide income between 20-35 percent.

What are the benefits of opening a business in Cyprus?

One of the main benefits of opening a business in Cyprus is that you can register remotely. You don’t need to physically be in the Republic. There are also a range of tax benefits, exemptions, and deductions for Cyprus companies.

When is an individual considered a tax resident in Cyprus?

For tax purposes, individuals are considered tax residents when they spend more than 183 days within the Republic. This may reduce down to 60 days if the individual maintains a permanent home in Cyprus, does not spend more than 183 days in another country, and conducts business/has employment within the Republic.