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Tax Advantages

Cyprus is unique when it comes to the taxation aspects of living on the island. Foreign residents who retire on the island are taxed at the flat rate of 5% per annum on their pensions for amounts exceeding € 3420.

 

Moreover Cyprus has signed double tax treaties with a lot of countries, Austria, Bulgaria, Canada, China, Czech Republic, Slovakia, Denmark, France, Germany, Greece, Hungary, Ireland, Italy, Kuwait, Norway, Poland, Romania, Russia, Sweden, UK, USA and Yugoslavia. The main purpose of these treaties is to safeguard its residents from paying tax in both countries. This enables its residents to receive private or public pensions and other investment income in Cyprus free of tax.

Cyprus is unique on the taxation not only because the double-taxation treaty but also because of the Duty Free privileges that offers to its foreign residents. They can enjoy the benefit of acquiring motor vehicles and household goods and furniture, duty free, provided they are for personal use. Non EU citizens benefit fully from these privileges. With respect to the rights of EU citizens, duty free privileges have changed since Cyprus’ accession to the EU, where now only retirees are eligible.

All Cyprus tax resident individuals are taxed on all chargeable income accrued or derived from all sources in Cyprus and abroad. Individuals who are not tax residents of Cyprus are taxed on certain income accrued or derived from sources in Cyprus.

An individual is tax resident in Cyprus if he spends in Cyprus more than 183 days in any one calendar year. Days in and out of Cyprus are calculated as follows:

  • the day of departure from Cyprus counts as a day of residence outside Cyprus
  • the day of arrival in Cyprus counts as a day of residence in Cyprus
  • arrival and departure from Cyprus in the same day counts as one day of residence in Cyprus
  • departure and arrival in Cyprus in the same day counts as one day of residence outside Cyprus

Foreign taxes paid can be credited against the personal income tax liability

The following income tax rates apply to individuals:

An individual is tax resident in Cyprus if he spends in Cyprus more than 183 days in any one calendar year.

Days in and out of Cyprus are calculated as follows:

  • the day of departure from Cyprus counts as a day of residence outside Cyprus
  • the day of arrival in Cyprus counts as a day of residence in Cyprus