Cyprus Tax Residency and Non-Domiciled Rules for Individuals

Cyprus Tax Residency and Non-Dom Rules

Cyprus, nestled at the crossroads of Asia, Europe, and Africa, is the third largest island in the Mediterranean Sea, offering a strategic gateway to the Middle East. This sovereign European nation is not just a hub of rich cultural heritage and a high standard of living; it also stands out as an attractive destination for individuals looking to optimize their tax status through residency. Cyprus has established itself as a compelling choice for residency, thanks to its tax exemptions, quality of life, and the beneficial tax regime under the "60-day rule" and the "183-day rule".

Understanding Cyprus's Tax Residency Rules

183-day Rule

In Cyprus, tax residency for individuals is determined based on physical presence. If an individual spends more than 183 days in Cyprus within a tax year, from 1st January to 31st December, they are considered a Cyprus tax resident. This residency status subjects them to taxation under Cyprus Tax Laws, which are designed to be favorable to residents.

60-day Rule

Enhancing its appeal, in 2017, Cyprus introduced an amendment to its tax law with the "60-day rule." This rule is tailored for individuals who do not meet tax residency requirements in any other country and are not tax residents elsewhere. To qualify under this rule, an individual must:

• Spend at least 60 days in Cyprus within the tax year,
• Be involved in business activities, employed, or hold an office with a Cyprus tax resident company during the tax year,
• Maintain a permanent home in Cyprus, whether owned or rented.

This rule allows individuals to become Cyprus tax residents without having to spend the majority of the year on the island, provided they are not considered tax residents in any other country.

Privileges of Residing in Cyprus

Cyprus is not only about strategic geographical advantages or a gateway to diverse cultures; it's about embracing a lifestyle that balances work and leisure, modernity and tradition. Here are some privileges that individuals relocating to Cyprus can enjoy:

• A high quality of life with one of the lowest crime rates in Europe,
• Over 300 days of sunshine per year, offering a blissful Mediterranean lifestyle,
• Significant tax advantages offered by the Non-Domicile (Non-Dom) regime, allowing tax residents not domiciled in Cyprus to benefit from various tax exemptions, especially on foreign source income,
• Membership in the European Union, providing access to a single market and a wide range of other benefits,
• A comprehensive health insurance and social security system ensuring well-being and security.

Cyprus’s tax residency rules, particularly the "60-day rule," along with its Non-Dom regime, offer a financially advantageous framework for individuals. This, combined with the island’s lifestyle and strategic location, makes Cyprus an attractive destination for those seeking to relocate for tax and personal benefits. Whether for individuals pursuing a higher quality of life or seeking efficient tax planning, Cyprus presents a compelling proposition.