Tax revolution in Cyprus

Cypriot taxes have always been meager. For example, the income tax rate is only 12.5%, and there are no inheritance and wealth taxes.

However, the Cypriot government has just announced another massive tax cut and non-domicile tax resident status. It is genuinely ground-breaking news!

Non-domicile tax residents - tax exemption.

Until July 16, 2015, all tax residents in Cyprus paid the Special Tax Contribution on income earned in Cyprus and other jurisdictions. It is a tax on dividends (17%), interest on deposits (30%), and rental income (3%).

Who is considered a Cypriot tax resident? Tax residency in Cyprus is determined by the number of days the taxpayer spends in Cyprus. A person who has stayed in Cyprus for 183 days or more during a calendar year is considered a tax resident.

Currently, the status of "non-domiciled tax resident" (non-domiciled tax resident) has been introduced. A tax resident of Cyprus (whether a foreigner or a citizen of Cyprus) who has this status is exempt from paying all the above taxes.

Who is a "non-domicile tax resident" (for persons not born in Cyprus)? A person is a "non-domicile tax resident" if, after moving to Cyprus, he has been a tax resident in Cyprus for less than 17 years (out of 20 consecutive years).

This innovation is exciting for investors who gain Cypriot citizenship. As before, they have no obligation to pay taxes in Cyprus unless they become tax residents in Cyprus - they pay taxes in their home countries. Now they can move to Cyprus, become tax residents of the country and not pay the above tariffs.

The attractiveness of the Cypriot jurisdiction increases significantly! Cyprus expects an influx of foreigners moving to Cyprus permanently for tax exemption. Among other consequences, foreigners will increase the value of Cypriot property. Therefore, those thinking about buying property in Cyprus should not put off their decision for a long time!

Reducing Other Taxes

Currently, the Cypriot government has introduced the following benefits:

Capital Gains Tax. Capital Gains Tax is waived on properties purchased between July 16, 2015, and December 31, 2016, and sold at a higher price in the future. Previously, it was 20%.

Tax on transferring ownership - title (Transfer Fee). There is no Transfer Fee for real estate subject to VAT. When purchasing real estate that is not subject to VAT, the Transfer Fee rate is reduced by 50% ("Law of the Department of Land Affairs (Amendment No. 2)" was adopted on July 14, 2016, at the plenary session of the Parliament of Cyprus.

VAT (VAT). When purchasing real estate, a preferential VAT rate of 5% is charged instead of the current rate of 19% (subject to some simple conditions).

It is true a tax revolution!