In light of the recent abolition of the UK’s non-domiciled (Non-Dom) tax regime, the introduction of taxation on worldwide income and inheritance tax on worldwide assets, high-net-worth individuals (HNWIs) and entrepreneurs seek alternative jurisdictions with favourable tax treatment, security, and access to the EU market.

With an advantageous tax system, strategic geographic location and EU membership, Cyprus presents an ideal jurisdiction for individuals looking to optimize the tax treatment of their business or personal affairs.

Benefits of Cyprus Non-Dom Regime

The Cyprus Non-Dom taxation regime, introduced in 2015, provides individuals with valuable financial advantages that include:

Dividends and Interest Income:

• Exemption from Special Defence Contribution (SDC) tax on dividend and interest income for Non-Dom Status holders, normally levied at 5%.

• Applies to both Cyprus and foreign-sourced income, making it highly appealing for investors and businesspeople.

• Non-Dom Cyprus Tax Residents are only liable to pay the 2.65% GHS tax on Worldwide Dividend Income, which is capped at a maximum of €4,770 per year.

Tax-Free Disposal of Investments

• No capital gains tax is levied on worldwide investment profits, such as stocks and  securities.
• Only gains on the disposal of real estate in Cyprus are taxed (at 20%).

Flexible Personal Tax Residency Options

Cyprus has two options when it comes to obtaining a Cyprus Tax Residency:

• 183-day rule – Become a tax resident in Cyprus by being in Cyprus for over 183 days annually.
• 60-day rule – Tax residency in 60 days of stay, with observance of particular conditions (e.g., stability of business connections in Cyprus). Read more here.

Furthermore, Individuals with Non-Dom Status can extend their status for up to two additional 5-year periods.

Additional Benefits through Cyprus Tax Residency

In addition to the benefits listed above, individuals who transfer their personal tax residency to Cyprus may also take advantage of the following:

50% Personal Income Tax Exemption for High Earners

50% personal income tax exemption for a period of 17 years for individuals moving to Cyprus for work and earning over €55,000 per annum. Read more here.

No Wealth or Inheritance Tax

• No wealth, gift, or inheritance tax for Cyprus-based assets, ensuring smooth succession planning.

• One of the strengths compared to the UK, which may impose an inheritance tax of up to 40%.

Corporate and Business Benefits

Cyprus is an ideal jurisdiction for doing business internationally, offering additional advantages at a corporate level, including:

Low Corporate Tax for Business Owners

-15% corporation tax rate, lowest in the EU.

-Losses can be carried forward and be set-off against any taxable profits of the next seven years.

Ideal Business & Investment Environment

• EU membership ensures regulatory stability and access to the European market.

• Extremely wide double tax treaty network with over 65 countries, preventing double taxation of income.

• The relocation process may be facilitated through Permanent Residency-by-Investment route. Read more here.

Cyprus IP Box Regime

A Specialised Tax Regime introduced for Companies investing in Research and Development and specifically in relation to expenditure incurred in the development of a Patentable invention or novel Computer Software. The IP Box could result in an effective corporate tax rate of as low as 3%. Read more here.

• Notional Interest Deduction (NID)

NID is available to new capital introduced in Cyprus companies in the form of an increase in the share capital. This tax deduction is capped at 80% of taxable income.

• Accession to Schengen Area

With Cyprus’ accession to the Schengen area anticipated in 2026, businesses can expect:

• Simplified travel and business mobility across Europe without internal checks or visa complications.
• Access to a broader talent pool. Businesses can more easily attract and relocate skilled professionals from across the EU.
• Non-EU National residents of Cyprus will be able to travel within the Schengen Area freely whether for tourism, business or work.

Contact us at info@paraschou.com.cy for further advice on relocation and setting up in Cyprus.

📞  Telephone: +357 22 622 262

✉️  Email: info@paraschou.com.cy

🌐  Website: www.paraschou.com.cy

* This article is for informational purposes only and does not constitute legal, tax or any other form of advice.