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^{CYPRUS: Non–Domicile Tax Rules & Relocation}

^{It offers many opportunities and several benefits for businesses and individuals to work fully or partly from Cyprus.}

Cyprus with its attractive tax regime, great quality of life, and stable political climate, could be an ideal location to reside. The various tax exemptions can certainly be utilized to effectively structure your tax liability.

The 60-day Rule combined with the applicable ‘Non-Dom’ regime has proven extremely popular with location-independent entrepreneurs, business people, investors or Digital Nomads
(people working remotely; ask for further information), and family Cyprus Non-domicile Status.

In case of receipt of passive income may be eligible for a Non-dom Status. The latter allows Cyprus tax resident individuals, not born in Cyprus and have not lived in Cyprus to benefit from
a complete 17-year exemption from taxes, that is Special Defence Contribution (SDC), levied on interest and dividend income. A zero-tax rate on passive income is surely a preferred bonus
over the standard 17% rate on dividends and a 30% rate on interest income for Cyprus-domiciled individuals.

Main Tax Benefits for an Individual that Chooses to Become a Cyprus Tax Resident

Individuals who are Cyprus tax residents, whether under the “60-day rule” or under the “183-day rule” are taxed in Cyprus on their worldwide income, however, certain exceptions apply, as follows:

A Cyprus tax resident individual but non-domiciled in Cyprus is exempt in Cyprus from taxation on his/her worldwide dividend and ‘passive’ interest income (e.g. interest and rental
income) under the ‘Cyprus Non-Domiciled Tax Status’ (as above).
Profit from the sale of securities is exempt from tax in Cyprus. ‘Securities’ include, inter alia, shares in local or foreign companies, bonds, debentures, options, etc., except in cases
where the value of the shares derives from the value of immovable property in Cyprus.
The 50% exemption rule:
Individuals who take up employment in Cyprus with an annual income in excess of €100.000 will be eligible for an exemption from taxation of 50% of their income for a period of 10
years, commencing from the year of employment, provided that he/she has not been a tax resident of Cyprus three out of the five years preceding the year of employment.
The 20% exemption rule: Individuals who take up employment in Cyprus and were not tax residents in Cyprus prior to commencing such employment will be eligible for an exemption from taxation of 20% of their income or €8.550 (whichever is lower) from any employment which is exercised in Cyprus.
Income from employment carried out outside Cyprus is exempted from Cyprus income tax, provided that the employment exercised outside Cyprus exceeds 90 days per tax year.
Low Tax Rate in respect of Foreign Pensions, taxed in Cyprus at the flat rate of 5% for amounts more than €3,420.
No inheritance tax, no wealth tax, no gift taxation, no immovable property taxes.

Further Benefits

Right to live and work anywhere in the EU, if you are an EU citizen.
Access to the country’s excellent healthcare system and high educational standards.
Safe country and excellent lifestyle.

Definition of Non-Domiciled Persons

In accordance with the provisions of the wills and Succession Law, there are two kinds of domicile:

- The domicile of origin, which is received at birth (generally depending on the father’s side), or
- The domicile of choice, which is acquired by a physical presence in a particular place and by demonstrating a sufficient intention to make it the place of permanent residence.

Tax Residency Rules for Individuals

A person who satisfies any of the below criteria can receive a tax residence certificate by submitting a written application and supporting evidence documentation.

The 183 days rule: A person resides in Cyprus for one or more periods exceeding a total of 183 days in the tax year.
The 60 days rule: A person resides in Cyprus for at least sixty (60) days in the tax (calendar) year. Moreover, need to meet all the below criteria:

1. He/she carries out any business in Cyprus; and/or works in Cyprus and/or holds an office in a company that is tax resident in Cyprus during the tax year; and

2. He/she maintains a permanent residence in Cyprus (owned or rented); and

3. He/she does not reside in any other single state for a period exceeding 183 days, and

4. He/she is not a tax resident in any other state.

Next Step

Book a preliminary teleconference consultancy meeting. Our experienced team can assist you with the procedures of obtaining Cyprus Tax Residency status & Advisory for Relocation.

This email address is being protected from spambots. You need JavaScript enabled to view it. | Tel: +357 22 669017.

DIGITAL NOMADS

An Attractive Visa Scheme in Cyprus

Digital nomads, as the term implies, are people who work remotely from anywhere in the world, using digital technology to perform their job. This coincides with the worldwide trend of the companies that adopted widely “Remote working”.

The Government of the Republic of Cyprus introduced a specific visa programme, with several incentives for people who would like to take advantage of all the benefits of living on the island, while working for companies who operate outside the country.

What is the "Cyprus digital nomad visa"?

The "Cyprus Digital Nomad Visa" Scheme allows nationals from non-EU and non-EEA countries, who can perform their work location-independently using telecommunications technology, to reside temporarily in Cyprus and work for an employer registered abroad or provide services for companies or clients located abroad

The Scheme’s goal is to strengthen Cyprus as a center for the provision of electronic services, where in combination with the other advantages offered, the attraction of digital nomads will contribute to the development of the business ecosystem and consequently to the economic development of the country. The introduction of the "Cyprus Digital Nomad Visa Scheme" is included in the Strategy for Attracting Businesses for Activities or/and Expansion of their Activities in Cyprus.

Main Benefits to Non-EU or non-EEA Nationals

 Can perform work remotely through telecommunications technology;

 Are employed by their own company or another company registered abroad, for which they can work location-independently, or are self-employed offering services remotely for clients located abroad;

 Can prove that they have stable and sufficient monthly net income of at least €3.500 (after the deduction of contributions and taxes).

What are the benefits of the digital nomad scheme?

Individuals that are granted a Digital Nomad residence permit will benefit from the following:

 Right of residence for a year in Cyprus, with a possibility of renewal for further two years.

 Right of residence for family members, for the same period as the Digital Nomad, without the right to be employed of perform economic activity in Cyprus.

 If they reside in the Republic for one or more periods that in total exceed 183 days within the same tax year, then they are considered tax residents of Cyprus, provided they are not tax residents in any other country. In this way, one can be eligible for a good number of tax benefits (request further information).

Family members

 Digital Nomad’s family members can reside in Cyprus for the same period as the Digital Nomad, without the right to be employed or perform any economic activity in Cyprus.

 Family members include the spouse/ partner in a civil union and underaged children.

 Family members also need to obtain a temporary residence permit following the procedure below.

Requirements

There’s a minimum threshold of funds coming from abroad (supported by salary, bank statements, etc) set to €3.500 per month, an increase of 20% for the spouse and by 15% for any minor child.

Medical insurance covers in-patient, out-patient, and transportation of mortal remains.

Declaration, that the applicant and his dependent family members, do not intend to work, or to provide services or be engaged in any form of business with any companies or clients located in Cyprus.

Clean criminal record certificate from the country of residence.

Must have suitable accommodation in the Republic of Cyprus

Procedure

 Within 3 months of arrival, the applicant should submit the relevant application along with the required documents, to the Migration Department in Nicosia. All documents accompanying application forms should be officially translated and duly certified/ ratified.

 Applications can be submitted personally or through an authorised representative.

 For the issuance of the temporary residence permit capturing biometric data (photo and fingerprints) and the signature of the third country national is necessary, which is done with the presentation of the application submission receipt and a valid travel document.

Examination time

The time of examination is between 5 – 7 weeks from the time of submission.

Duration of temporary residence permit

A first temporary residence permit is issued with a validity of one year. In case of renewal, the temporary residence permit is issued with a validity of maximum two years.

Next Step

Book a preliminary complimentary teleconference consultancy meeting. Contact us by email: This email address is being protected from spambots. You need JavaScript enabled to view it. or call at +357 22 669 017

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Cyprus is a tax-efficient EU Intellectual Property location. It offers full international protection for IP assets and significant financial benefits.

Choosing the right location for the centralization and management of IP is a very important strategic business decision. Cyprus could be the ideal location to safeguard and protect an organisation’s IP and contribute to its tax optimization. Cyprus IP legislation is applied in line with the OECD's guidance and reviewed and assessed according to the EU Code of Conduct.

Cyprus Intellectual Property (IP) Regime - Main Benefits

Cyprus IP Box Regime protects the IP but also economic-tax benefits.

Tax benefits of Cyprus IP companies

80% of worldwide royalty income generated from IP owned by Cypriot resident companies (net of any direct expenses*) is exempt from income tax.
80% of profit generated from the disposal of IP owned by Cypriot resident companies (net of any direct expenses*) is exempt from income tax.
any expenditure of a capital nature for the acquisition or development of IP is claimed as a tax deduction in the year in which it was incurred and the immediate four following years on a straight-line
All the above exemptions are also available for IPs acquired or developed before January 2012.

Cyprus’ wide double tax treaty network and access to the EU Interest and Royalty Directive serve as additional means for the group to achieve tax optimization when it comes to IP exploitation through Cyprus.

Other Benefits of Cyprus IP Companies

Resting on a sound legal system based on Common Law principles and being a signatory to International Conventions on the Protection of Intellectual Property, Cyprus’s IP tax regime is considered the most favourable in Europe, affording the maximum protection, stability, and assurance for IP owners.

The IP regime has been reviewed by the EU Code of Conduct and has been assessed as fully compatible with EU standards

Reasons to Protect Your Organisations Intellectual Property (IP)

Protecting your IP is a must in the digital age. It is the only legal way to avoid having your unique ideas, products, or services copied or used without permission.

Intellectual Property (“IP”) can be one of the most valuable assets of an organization, which may be sold or used for other commercial purposes for a fee.
By granting a patent, you acquire exclusive rights to use and exploit your invention.

A patent is granted by the Intellectual Property Section https://www.intellectualproperty.gov.cy/en/

Qualified IP Assets

Eligible IP assets shall include a wide range of intangibles including: Copyrights, Patented inventions, Trademarks.

How P. Kalopetrides & Co. can assist you?

Cyprus IP holding structures and initial set-up
Corporate statutory compliance matters
Existing IP – tax efficient transfer to Cyprus IP company
Eligibility of tax depreciation
IP-related substance
Ongoing corproate and statutory complianace matters.

P.Kalopetrides & Co.

Contact us to find out how to protect your assets.

Book a preliminary teleconference consultancy meeting.

Contact us by email: This email address is being protected from spambots. You need JavaScript enabled to view it. or Tel: +357 22 669017

TAX BANNER 02

	31/01	31/03	30/04	31/05	30/06	31/07	01/08	31/08	31/12
Submission of declaration of deemed dividend distribution (TD 623) for the profits of 2020 and payment of SDC and NHS.
Electronic submission of the income tax return for tax year 2021 for companies (TD 4)
Electronic submission of income tax return of physical persons preparing audited financial statements for 2021 (TD 1).
Payment of premium tax for life insurance companies 1st, 2nd & 3rd instalment for 2023 (TD 199).
Electronic submission of the 2022 employer’s return (TD 7)
Payment of Special Defence Contribution (SDC) & NHS (if payment is made to Cyprus tax resident individual) of 2023 (semester) on rents if such tax is not withheld at source by tenant and on dividends or interest from sources outside Cyprus (TD 604, 612, 613).
Payment of Annual Levy €350 by Companies to the Registrar of Companies for 2023.
Electronic submission of 2022 personal tax returns of individuals (employees and pensioners) and payment of income tax liability through tax portal (codes 200 & 2013).
Submission of the 2023 provisional tax return and payment of first and second installments of tax through tax portal (code 300).
Payment of 2022 final tax balance under the self - assessment method by companies and payment of personal income tax under the self-assessment method by individuals preparing audited financial statements through tax portal (code 300).
Payment of tax deducted from employees salary (PAYE) TD 61.		By the end of each month for the previous month.
Payment of employee social security contributions and National Health System (NHS).
Payment of tax withheld in the preceding month on payments to non-Cyprus residents.

Notes:
1. Tax Returns can only be submitted electronically.
2. Tax payments can only be made electronically.
3. Revised tax returns can be submitted from tax year 2018 onwards, within 3 years from the submission deadline.

4. An administrative penalty of €100 or €200 (depending on the specific case), is imposed for late submission of a tax return.

Interest & Penalties according to circumstances
as from 01/01/2020 - 31/12/2022      1,75%
as from 01/01/2019 - 31/12/2019      2%
as from 01/01/2017 - 31/12/2018 3,5%
as from 01/01/2015 - 31/12/2016      4%
as from 01/01/2014 - 31/12/2014      4,5%
up to 31/12/2006 4,75 - 9%