NON-DOMICILE STATUS

• Tax-free on worldwide dividend, interest, and rental income.
• Non-Domiciled Status: An individual who is a tax resident in Cyprus under the 60-days or 183-days rule, but is considered “non-domiciled” (i.e., origin not from Cyprus).
• Tax Residency Criteria:
  • To become a tax resident in Cyprus, you must live on the island for either 183 days or 60 days in one calendar year.
• Non-Dom Status Eligibility:
  • Non-Dom status can be granted to a Cypriot tax resident who has not lived on the island for 17 out of the last 20 years before the tax year.
  • This applies to relocated, native residents who were predominantly domiciled elsewhere.
• Note: You can be a resident of multiple countries and hold several citizenships, but you can only be domiciled in one country.

Cyprus Tax Residency

Tax residency in Cyprus is determined by several criteria, including the duration and purpose of stay, personal and economic ties to Cyprus, and the location of one’s primary interests. An individual may qualify as a tax resident in Cyprus under the following conditions:

• Physical Presence: Spending over 183 days in Cyprus within a tax year (January 1st – December 31st) establishes tax residency.
• The 60-Day Rule: If an individual spends more than 60 days in Cyprus, does not reside in any other country for over 183 days, and maintains personal and economic ties to Cyprus without being a tax resident elsewhere, they qualify as a Cyprus tax resident.
• Permanent Residency: Obtaining a permanent residency permit in Cyprus also leads to tax residency.

Once deemed a tax resident, individuals are subject to taxation on their global income, encompassing earnings from employment, self-employment, property, and investments. Cyprus offers a favourable tax regime, including low rates, substantial exemptions, and over vast international tax treaties.

• Acquire a new residential premise in Cyprus worth a minimum of €300,000 (excluding VAT). The first €200,000 must be paid by the date of filing of the application. Additionally, the purchases must be ‘first-time’ sales meaning that they are to be bought for the first time from a property development company.
• Open and maintain a fixed deposit in a Cyprus bank of a minimum €30,000 for three consecutive years.
• Maintain a secured annual income originating from outside of Cyprus of at least €30,000. Such funds must be increased by €5,000 for each dependent, and €8,000 for each parent included in the application.
• The applicant will need to undergo a ‘Fit and Proper’ test.  To comply with due diligence procedures, he or she will need to show a clean criminal record certificate.
• The applicant will need to visit Cyprus once within the first year to register biometrics and visit Cyprus every two years thereafter.

Benefits of Cyprus Permanent Residency on a fast-track basis

This process may be completed within just 2 months and will grant investors EU residency in a safe and secure jurisdiction which vaunts one of the lowest crime rates in the EU.

Moreover, Cyprus offers a very cost-effective tax regime, with favourable tax rates and an extensive network of double tax agreements.
A highly attractive benefit of Cyprus Permanent Residency for non-EU nationals is the ability to travel within EU. The permit will grant them the right to visa-free access to a number of Schengen countries.

Permanent Residency on a ‘normal-track’ basis – residence within 1 year

In virtue of Regulation 5(f), a third country national who rents or purchases a house or apartment which is worth a minimum of €300,000 may apply for permanent residency under the normal-track basis, provided that:

• They have a secured annual income of at least €10,000 approx. from sources outside of Cyprus. The amount is increased by €5,000 approx. per dependent added to the application;
• The applicant must not maintain employment in Cyprus and his or her income must derive from legal sources abroad;
• Supporting evidence that all the financial needs of the family are adequately catered for is given to ensure that the income is secure and provides ample support for the applicant and their family;
• The applicant will also undergo a Fit and Proper Test.

Unlike the fast-track basis, the normal-track basis imposes a lower threshold of annual income. Moreover, the normal basis is more flexible as it gives the applicant the option to rent, rather than purchase a property. Additionally, upon filing the application the applicant will be able to freely travel to and from Cyprus with no hindrances.

Permanent Residence Permit for non-EU citizens residing in Cyprus

Third Country Nationals may apply for a Permanent Resident Permit upon legally staying in Cyprus for at least 5 years and having held a Temporary Resident Permit for the entire preceding period.

Family members of non-EU citizens living in Cyprus who are non-EU citizens themselves may also apply for a Permanent Residence Card which is valid for 5 years and can be extended.

Permanent Residence Permit for EU Citizens (Yellow Slip)

The Yellow Slip is the permit required for EU citizens seeking to reside and work in Cyprus, thus spending more than 3 months in the country.

Within just 12 working days, the Yellow Slip programme grants EU citizens the opportunity to settle and work in Cyprus permanently without the need to renew the permit.

The applicant may also include members of the family who will be able to reside and work in Cyprus. Family members who are non-EU nationals will become eligible for the Pink Slip a temporary and renewable document which is valid for 5 years.

• Article 8(21A) – new 20% exemption

20% exemption from income tax of the remuneration from first employment in Cyprus commencing after 26 July 2022 (up to a maximum exemption of €8,550 per year) by individuals who, for at least three consecutive years immediately prior to commencement of their employment, were employed outside Cyprus by a non-Cypriot resident employer.

The exemption applies for seven tax years, commencing from the tax year following the year of employment in Cyprus.

In order to benefit from the exemption, the Law does not require the individual to become a Cypriot tax resident nor the employer to be a Cypriot tax resident.

• Article 8(23A) – new 50% exemption

50% exemption from income tax of the remuneration from employment in Cyprus commencing from 1 January 2022 onwards, by individuals who were not tax residents of Cyprus for a period of at least 15 consecutive years (was 10 years, prior to the amendments) immediately prior to the “commencement of first employment in Cyprus” (see below for definition), provided that the remuneration exceeds €55,000 per year.

The exemption is granted once in a lifetime and applies for a maximum of 17 years or until repeal of the provisions of Article 8(23A) (whichever occurs first), commencing from the tax year of first employment in Cyprus.

Similarly to the 20% exemption, in order to benefit from the 50% exemption the Law does not require the individual to become a Cypriot tax resident nor the employer to be a Cypriot tax resident.

Moreover, the exemption is granted for any tax year in which the annual remuneration exceeds €55,000, regardless of whether the said remuneration falls below €55,000 in any tax year, provided that:

• during the first or the second year of employment in Cyprus the annual remuneration exceeded €55,000, and
• the Commissioner is satisfied that the fluctuation in the annual remuneration from employment in Cyprus is not part of an arrangement aiming to benefit from the exemption.