Cyprus tax residency

By George Konstantinou

Updated: July 14, 2024

According to the Income Tax Law of 2002, under the “183-day rule”, an individual who spends at least 183 days a year in Cyprus is considered a tax resident. On 14 July 2017, the Cyprus parliament voted for a Cyprus tax law amendment adding a second test – the “60-day rule” – to determine Cyprus tax residency for individuals.

The “60-day rule” concerns individuals who do not fulfil the tax residency requirements in any country.

How to become a Cyprus tax resident under the 60-day rule?

To become a Cyprus tax resident based on the “60-day rule”, the individual must meet all of the following conditions:

Remain in Cyprus for at least 60 days during the tax year in question; and
Do not reside in any other single state for a period exceeding 183 days; and
Is not tax resident in any other state; and
Carry out business activities in Cyprus and/or work in Cyprus and/or be a director in a company that is tax resident in Cyprus at any time of the tax year in question; and
Maintain a permanent residence in Cyprus.

What are the applicable tax benefits?

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

A Cyprus tax resident individual but non-domiciled in Cyprus is exempt from taxation on his/her worldwide dividend and ‘passive’ interest income. An individual who does not have a “Domicile of Origin” in Cyprus is only considered to be domiciled in Cyprus for tax purposes when the individual has been a tax resident of Cyprus for a period of at least 17 years out of the last 20 years prior to the tax year in question.
Profit from the sale of securities is exempt from tax in Cyprus. ‘Securities’ include, among other things, 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.
An individual who is going to be employed in Cyprus and his/her income will exceed €100.000, and, provided that he/she has not been a tax resident of Cyprus before the commencement of his/her employment in Cyprus, he/she will enjoy 50% discount on his/her income tax in Cyprus, for 10 years.
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.

Frequently asked questions

Do non-residents pay taxes in Cyprus?

Non-residents pay tax in Cyprus for income they get from sources within Cyprus. They don’t pay tax on their worldwide income.

The tax paid on income from Cyprus is charged according to a rate. For example, the first 19,500 euros are not taxable. Then, an income between 19,501 - 28,000 euros is taxed at a 20% rate, and so on. Any income over 35,000 euros is taxed at a 35% rate.

There are income sources exempt from income tax, such as interest and dividends.

Does Cyprus have a favourable tax system?

Absolutely. Cyprus boasts a favourable tax system for both individuals and businesses. Non-residents of Cyprus pay tax only on income from sources within Cyprus, with the first 19,500 being tax exempted. Other exceptions also apply.

Individuals do not have to pay tax on dividends, interest (unless it is interest from activities closely related to your business), gains arising from the disposal of Securities and others. If you are an expat pensioner, you may opt to pay tax at a flat rate of 5% on any amount over 3,420 euros.

Moreover, companies registered and conducting business in Cyprus pay among the lowest corporate tax rates in the EU (12,5%) and enjoy exemptions from income tax, such as income from dividends and interest (unless it is interest from activities closely related to your business). Certain intellectual property assets have an 80% exemption from income tax. There are also exceptions for certain types of shipping activities.

Finally, suppose you are non-domiciled in the Republic. In that case, you do not have to pay the SDC tax (Special Contribution for the Defence), a tax levied on certain income and activities, such as dividends, interest and rental income.

Who is a non-Cyprus tax resident?

A non-Cyprus tax resident is a person who spends less than 183 days in the Republic in a tax year (1 January - 31 December of any calendar year), does not spend more than 183 days in another country, spends less than 60 days a year in Cyprus, and is a tax resident of another country.

What is a non-domiciled tax resident in Cyprus?

A non-domiciled tax resident of Cyprus is a person who is not domiciled in Cyprus but is a tax resident of Cyprus; that is, they spend at least 183 days a year in Cyprus or they spend less than 183 days a year but do not spend more than this amount in another country, spend at least 60 days in Cyprus and are not tax residents in another country.

A person is domiciled in Cyprus in one of two ways. First, because they have their domicile of origin in Cyprus. Or, second, because they have their domicile of choice in Cyprus. They have a domicile in Cyprus and intend to stay there permanently or indefinitely.

How do I become a tax resident of Cyprus?

You become a tax resident of Cyprus according to the 183 days rule or the 60 days rule. The 183-day rule says that a person is a tax resident of Cyprus if they spend at least 183 days a year (1 January - 31 December) in Cyprus.

The 60 days rule says that a person is a tax resident of Cyprus if they spend at least 60 days a year (1 January - 30 December) in Cyprus and fulfil all the following conditions: 1) they do not reside in any other country for more than 183 days, 2) they are not tax resident in any other state, 3) carry on business activities in Cyprus, 4) maintain a permanent residence in Cyprus.

What are the Cyprus tax residency requirements?

The Cyprus tax residency requirements are summed up in the 183-day or 60-day rule. The 183-day rule says that a person is a tax resident of Cyprus if they spend at least 183 days a year (1 January - 31 December) in Cyprus.

Do foreigners pay taxes in Cyprus?

Yes, if they have sources of income within the Republic. If they are tax residents of Cyprus, they pay tax on income arising from sources within Cyprus and abroad.

What are the Cyprus tax rates for foreigners?

The tax rates for foreigners in Cyprus depend on whether they are tax residents of Cyprus. If a foreigner is a tax resident of Cyprus, they will pay tax on their worldwide income from sources within and outside Cyprus. The exact rate is charged to foreigners and non-foreigners.

If a foreigner is not a tax resident of Cyprus, they will pay tax on their income from sources within Cyprus. The exact rate is charged to foreigners and non-foreigners. Expat pensioners may pay a flat rate of 5% on their pension, with the first 3,420 euros being tax exempted.