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Tax in Cyprus -
Income Tax and Capital Gains Tax Guide
Tax Advantages
Cyprus offers an excellent taxation regime for individuals, particularly those who choose to retire to the island.
The following income tax rates apply to individuals:
Chargeable income
(EUR) |
Tax Rate
(%) |
Accumulated tax
(EUR) |
| 0 – €17,086 |
- |
- |
| €17,087 – €25,629 |
20 |
1.000 |
| €25,630 – €34,172 |
25 |
2.250 |
| over €34,172 |
30 |
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The residency rules are quite straight-forward. Firstly anyone can visit for 3 months a year without a visa and you can keep renewing it every 3 months providing you can show you can support yourself.
To obtain citizenship you will have to have been a resident for 7 years.
An individual who spends at least 183 days in Cyprus in the tax year will be considered to be a Cyprus permanent resident for tax purposes. Pensions drawn by a permanent resident from other countries are only taxed at a 5% rate making it very attractive to retire to Southern Cyprus.
Since Cyprus joined the EU, residency and work permits are no longer required of EU citizens. However, for non-EU citizens, employees of entities in Cyprus require 'Temporary Work and Residence (TRE) Permits', which are issued by the Central Bank. For this purpose, employees are categorized either as Executives or Non-Executives.
Double Taxation Agreements
Cyprus has double-taxation agreements with Austria, Bulgaria, Canada the People's Republic of China, the Czech Republic, Denmark, Egypt, France, Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Malta, Norway, Poland, Romania, Russia, (Armenia, Belarus, Kurdistan, Moldova, Tajikistan, Turkmenistan and Ukraine) Slovakia, South Africa, Sweden, Syria, the United Kingdom, the United States, Yugoslavia (Serbia and Montenegro) and other countries.
The main purpose of these treaties is the avoidance of double taxation of income earned in any of the above countries. A credit is usually allowed against the tax levied by the country of the tax payer's residence for taxes levied in the other country.
If you receive income in Cyprus, or make a capital gain, the double taxation treaty means that if the equivalent taxation rate in the UK is greater than the tax rate in Cyprus you will pay extra tax in the UK to make up the difference.
Duty Free Import Possibilities
If you are a European who becomes a permanent resident in Cyprus and you were using a car for at least six months in your original country, you can bring your car to Cyprus and you will not pay import tax.
Anyone who is intending to become a permanent resident in Cyprus can import furniture for their personal use free of any taxes.
Capital Gains Tax
Capital Gains Tax is levied at 20% on gains arising from the disposal of property if the property is owned personally.
If you choose to sell then Capital Gains Tax is charged on disposals of property in Cyprus and also on shares in companies owning property in Cyprus. The base date for calculating the acquisition cost of property is 1st January, 1980 - if the property was built later than this it is calculated backwards.
The first €17,086 of a gain from a disposal of a property is exempt. Capital Gains Tax does not apply to profits from the sale of overseas real estate by residents who were not resident when they purchased the asset.
Note that forming
a Cyprus company can reduce Income and Capital Gains Tax levels below
the personal rates.
Estate Duty/Inheritance Tax
If the deceased was domiciled in Cyprus, there is no Estate Duty payable. If the deceased was a tax resident in Cyprus, there is no Estate Duty on the Cypriot property or any other property owned by the deceased in any other country.
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