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M. Paraschou Law

60-day Rule & Non-Domicile

As we are approaching the end of the calendar (and tax) year, we have had quite a few requests and questions on Cyprus’ in-famous 60-day rule. 

This combined with the applicable ‘Non-Dom’ regime has proven extremely popular with location-independent entrepreneurs and business people. 

What does it mean to be a Cyprus Non-Domiciled Tax Resident? 

Individuals who are Cyprus Tax Residents (see next point) and who moved their tax residency to Cyprus from abroad, may apply and be considered as ‘non-domiciled’ in Cyprus. 

The so-called non-Dom regime exempts these individuals from Special Defense Contribution (SDC), which is levied on dividend, interest and rental income, for a period of up to 17 years. Indicatively, SDC on Dividends is levied at a rate of 17%, as such, the Non-Dom rules have proven extremely popular. 

What is the 60-Day Rule?

One of the conditions to obtaining the ‘Non-Dom’ status is to be a Cyprus Tax resident for Income tax purposes. This can either be achieved by spending 183 days in Cyprus in a calendar year or by utilizing the ’60-day’ regime. 

For Digital Nomads or location-independent business people, the 60-day rule is the preferred option. 

The ’60-day rule’ for Cyprus tax residency is satisfied for individuals who, cumulatively, in a tax year:

  • do not reside in any other single state for a period exceeding 183 days in aggregate
  • are not considered tax resident by any other state
  • reside in Cyprus for at least 60 days, and
  • have other defined Cyprus ties.

To satisfy the fourth criteria, the individual must carry out a business in Cyprus and/or be employed in Cyprus and/or hold an office of a company tax resident in Cyprus at any time in the tax year. 

The individual must maintain in the tax year a permanent residential property in Cyprus (either a rental property or a property owned by the Individual).  

Why become a Cyprus Tax Resident? 

Individuals who are Cyprus tax residents, either under the ’60-day rule’ or under the ‘183-day rule’ are taxed in Cyprus on their worldwide income. 

Exceptions include: 

  • Cyprus Non-Domiciled Tax Residents are exempt from worldwide dividend and ‘passive’ interest income. 
  • Profit from the sale of securities (incl. shares) is exempt from tax in Cyprus (note exemption for sale of shares in a Company holding real estate). 
  • 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.

Should you wish to find out more, contact our team at info@paraschou.com.cy.

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