Tax residency under the 60-day rule – Income tax

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Tax residency in Cyprus based on the 60 day rule

A natural person can be a tax resident of the Republic of Cyprus provided that they meet all the following criteria during the same time of taxation:

  1. does not spend more than 183 days in a country other than Cyprus;

  2. spends a total period of more than 60 days in the Republic of Cyprus (not compulsory in an uninterrupted manner);

  3. operates a business or is employed in Cyprus, or holds a position for a tax resident company in Cyprus (to obtain regular income) at any time during the tax year;

  4. maintains a permanent residence in Cyprus (owned or rented) – it is necessary at least to conclude a contract for the rental of accommodation for a period of (preferably) one year.

Taxation of individuals – tax residents in Cyprus

  1. Income tax

    • 20% (taxable income EUR 19,501 – 28,000);

    • 25% (taxable income EUR 28,001–36,300);

    • 30% (taxable income EUR 36,301 – 60,000);

    • 35% (taxable income above EUR 60,001).

  2. Dividend income is exempt from income tax but the special defense contribution is deducted (SDC) – 17%.

  3. Interest income tax
    SDC is deducted – 30%.

While having a payment of dividends and interest, the contribution to the General Healthcare System (GHS) in the amount of 2.65% is levied (deducted from income up to EUR 180,000 per year).

Non-Domicile status in Cyprus

The acquisition of this status will make it possible to obtain the exemption from the SDC, whose prices have been mentioned above. Consequently, the contribution to health care (2.65 % of income up to 180,000 per year) will only be deducted from dividends and interest.

In short, an individual may have a domicile of origin or a domicile of choice in Cyprus. An individual obtains a home of choice if he was a tax resident of Cyprus for at least 17 of the 20 years preceding the taxation year.

Thus, upon obtaining tax residency in Cyprus, the client will possess non-domicile status.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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