Cyprus Tax Residency/expatriate tax benefits

Cyprus Tax Residency and expatriate tax benefits

The Cyprus Parliament has unanimously approved an amendment to the Income Tax Law which now allows an individual to be considered a tax resident in Cyprus provided that the individual does not stay in any other state for one or more periods which exceed 183 days in the tax year, the individual is not tax resident in any other state for the same tax year and the following conditions are met:

(i) the individual must remain in Cyprus for a period of at least 60 days during the tax year;

(ii) the individual must maintain a permanent residence in Cyprus.  This can either be rented or bought.

(iii) the individual should pursue any business/employment in Cyprus or be a company director in a company which is already tax resident in Cyprus during the tax year.

It is noted that even if the above conditions are met, the individual is not considered a tax resident of Cyprus in the tax year if the business/employment/directorship ceases.

The above gives the non tax resident individual the opportunity to transfer tax residency to Cyprus and be taxed only on income from the activities exercised in Cyprus.

In calculating the days the following apply

  • the day of departure from Cyprus is considered a day outside Cyprus;
  • the day of arrival in Cyprus is considered a day in Cyprus;
  • arrival in Cyprus and departure from Cyprus within the same day is counted as one day in Cyprus;
  • departure from Cyprus and return to Cyprus within the same day is counted as one day outside Cyprus.

 

 

Income tax exemption for overseas employment

Where an individual receives remuneration from the rendering of services overseas to a non-resident employer or to an overseas permanent establishment of a resident employer for a period of more than 90 days in a tax year, then this income is exempt from income tax.

Expatriate tax benefits

An individual relocating to Cyprus is eligible for either

  • 50% deduction of remuneration from employment in Cyprus provided that the individual was not tax resident in Cyprus before commencement of employment. This applies for a period of 10 years starting from the first year of employment as long as income exceeds €100.000 per annum.

or

  • The lower of 20% of remuneration or €8.550 from employment in Cyprus provided that the individual was not tax resident in Cyprus before commencement of employment in Cyprus. This applies for a period of five years commencing 1 January following the year of employment and is valid for tax years up to 2020.

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