01/12/2025
CYPRUS TAX RESIDENCY AND NON-DOMICILE RULES
Cyprus tax residency for individuals is determined by the number of days spent in the country during a calendar year (183 days). The rule has, however, been amended to 60 days as of 1st January 2017. This means that you can be considered as a Cyprus tax resident provided that you satisfy either the 60 days or the 183 days rule. The amendment is made to attract a significant number of individuals (investors, entrepreneurs, digital nomads, artists, sportsmen, crew members, foreign employees, and other business-people) who do not fulfil the tax residency requirements in any country. Apart from staying in the country for at least 60 days in the tax year, the following conditions must be met by an individual to be considered for Cyprus tax residency under the 60 days rule:
• Do not reside in any other single state for a period exceeding 183 days
• Is not tax resident in any other state
• 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.
• Maintain a permanent residence in Cyprus (either owned or rented). Non-Domicile Tax Status Cyprus offers all immigrants the opportunity to assume the so-called Non-Dom status. This is especially interesting from an economic standpoint. The significant benefits which may be reaped from relocating to Cyprus and acquiring the Non-Dom status are one of a kind, incomparable to anywhere else in Europe. A person with a Non-Dom status in Cyprus has the right to conduct business via so-called offshore companies. This means much flexibility for individuals owning zero-tax-companies and offshore bank accounts, as well as a full tax exemption for all profits gained from their offshore activities. If individual wishes to conduct international business out of Cyprus and therefore needs business premises and a business tax file number to take advantage of value-added tax, he should strongly consider setting up a legal person in Cyprus. Besides the fact that Cyprus has one of the lowest corporate taxes in Europe, setting up a limited liability company (LLC) in Cyprus has another distinct advantage: Advantages of Obtaining Tax Residency in Cyprus It Is Beneficial To Be A Resident In Cyprus Compared To Many Other Countries As The Tax Regime Provides Many Advantages:
1. Cyprus tax residents are liable to income tax on their worldwide income, but the first €19,500 is tax-free.
2. Interest and dividends are liable to “Défense contributions” instead of income tax, but non-Cyprus domiciles are exempt.
3. You can choose whether your foreign pension income is taxed at the income tax rates or a flat 5% rate (with the first €3,420 tax-free).
4. There is no capital gains tax on the sale of shares. When it comes to property, only real estate in Cyprus is taxable.
5. There is no inheritance tax in Cyprus. Required documents for Cyprus Tax Residence The required documents for obtaining Cyprus tax residence certificate with Non-Domicile Status:
1. passport copy
2. bank statement for the last six months to demonstrate sufficient funds to live on
3. source of income
4. health insurance
5. residence rental agreement
6. yellow slip from immigration (MEU1 application form required for EU Nationals)
7. tax registration forms
8. in general, or any other legal matter under the sun, we are always available. Advantages of obtaining Tax Residency in Cyprus
1. The non-domiciled status is automatically granted to foreigners who have relocated to Cyprus for 17 years.
2. It is not applicable to follow the regulations of the SDC.
3. Tax residents of Cyprus are subject to a 17 per cent and 30 per cent tax on dividends and bank deposits, regardless of their source of income.
4. The first €19,500 of tax liability is tax-free. A progressive tax rate of 20% to 35% applies to earnings over €60,000.
5. Reimbursement for work performed in Cyprus is deductible by 50% for individuals who were not Cyprus residents before their employment. For ten years, individuals earning more than €100,000 are exempt from paying income tax.
6. A Cyprus compensation of less than €100,000 is exempt from taxation for a period of five years.
7. Non-resident employers in Cyprus who pay their employees’ wages for over ninety days in a taxation year are completely exempt from Cypriot taxation.
8. It is tax-free to profit from the subsequent sale of Cyprus fixed property purchased on December 31st, 2016.
9. Pensions derived from work performed outside of Cyprus over €3,420 are subject to a flat 5-percentage-point tax.
10. Exemption from taxation on lump sum payments made from a life insurance policy or authorised provident fund.
11. There are no capital gains taxes on real estate auctions outside of Cyprus. Wealth, inheritance, and gift taxes are not imposed. Beneficiaries who do not reside in Cyprus are exempt from Cyprus taxation on income or distributions derived primarily from interest or dividends of the trust. Declaring Non-dom status:
To be eligible for this deduction, a person must be declared exempt from it by the Department of Défense. The SDC Law provides that interest income is taxable, as shown in the table above. The Tax Department under the Ministry of Finance must issue a certification of exemption for taxpayers who wish to avoid the Special Defense Contributions on Interest deduction. Each account owner should complete a Declaration for joint bank accounts. A CYPRUS REDOMICILIATION FOR OVERSEAS COMPANIES I. Cyprus re-domiciliation application A foreign company registered in a country that provide re-domiciliation, if such required, should re-domicile under the Company Act, Cap 113, modifying its Articles of Association and Memorandum of Association in accordance with law. II. Submission of documents to Cyprus Registrar of Companies Shareholders’ resolution or equivalent document issued by the competent authorities following foreign legislation permitting a foreign business to be incorporated in Cyprus as a It is necessary to maintain a continuing legal entity. According to the regulations of the foreign nation, this decision must be apostilled. It is necessary to maintain a continuing legal entity letter to the Trade Register of the nation of formation (official notice). It is necessary to maintain a continuing legal entity Articles (M&A), whose M&A should comply with the Cyprus law requirements, was just approved. It is necessary to maintain a continuing legal entity using legal entityropriate foreign authority or equivalent documentation issued by the country’s relevant authority where the foreign business was incorporated been lawfully apostilled by the corresponding foreign authority. In order to maintain a continuing legal entity, a director of the foreign corporation must be appointed by the board of directors, affirming the following: –
1. In order to maintain a continuing legal entity, a director of the foreign corporation must be appointed by the board of directors, affirming the following: -the Registrar of Companies’ permission for the chosen name; The application may be submitted using the similar corporation’s name as the one that was first registered for the foreign firm.
2. The law of the country where the international business headquarters are located applies.
3. It is the law of the country where the international business headquarters are located that applies.
4. It could be the resolution referred to above or another document that authorises the international company to register in Cyprus and continue its operations.
5. That the foreign corporation chose to re-dome that authorises the registration of the international company in Cyprus and the continuation of its operations red to provide evidence that such notice was given.
6. No legal proceedings have been taken against the foreign firm for breaking the country’s laws in which it is registered, either criminally or administratively.
Proof of a company’s financial soundness and solvency, signed by a lawfully sanctioned director of the overseas entity. Signatories of the statement must affirm that they are unaware of any facts that might jeopardise the foreign company’s solvency during the next year following the date of application. If applicable, names of the foreign corporation’s directors, secretaries, and other top management. The names of foreign corporations’ directors, secretaries, and other top management, if applicable The names of foreign corporations’ directors, secretaries, and other top management, if applicable of incorporation: a) The foreign government permits such a request for re-domiciliation. b) In such a case, the authorities of the foreign nation permit the re-domiciliation oval of shareholders or other essential individuals. From February 12th, 2021, the new amalgamated from ME1 has been adopted, replacing the existing ME1 and MEA. III. Liabilities A director of an overseas business who provides a false statement or makes a false statement about the solvency of the international company, if convicted, will be punished with imprisonment for up to one year and a fine of up to 34,172,00 euros. IV. Licensed activities Any foreign firm intending to do business in Cyprus and requiring a license must follow Cyprus law, by the requirements of the law. V. For companies that provide operations that are licensed in their jurisdiction and need comparable licenses in Cyprus, the competent authorities of their nation must provide proper approval for their re-domiciliation. If the firm is presently based in another nation, this approval must also be obtained from that country. VI. Public Companies In addition to the items listed above, you will be required to provide the following information if the company is publicly traded: Additionally, if the company is publicly traded, you will need to provide the following information You will be required to provide the following information if the business located abroad is a publicly traded company, Cyprus must be submitted. In addition to the items listed above, you will be required to provide the following information if the company is publicly traded
VII. Registration in the Republic Once the Registrar is satisfied that all of the information provided above complies, the documentation is placed on hold according to Cap.113 of the Companies Law. A registration certificate certifies that a foreign corporation has been temporarily suspended and licensed as an ongoing entity. Cyprus’ official gazette will publish the proposed continuation certification and the company’s official publication. VIII. Name A change of company name is required by the Cyprus Registrar before registration if the name is confusing or needs to be clarified he legal ramifications of a temporary license. The following applies to the foreign corporation as of the day when the temporary registration was issued: In accordance with Cyprus company act, Cap 113 is considered a legal entity that has been legally established in accordance with Cypriot law by preliminary registration in that country. Following Cypriot law, is entitled to all privileges and obligations allowed to Cyprus-registered enterprises. When applicable, the component manuscript of modification is deemed to be the company’s Memorandum and its Articles of Association. In addition to the component manuscript of modification, the company’s Memorandum is considered to be its Articles of Association when pertinent
1. When applicable, the component manuscript of modification is deemed to be the company’s Memorandum and its.
2. To cause harm to or otherwise interfere with the continued existence of the foreign corporation as a legal entity.
3. To have an impact on the property owned by the foreign corporation and how it will manage its assets, rights, and responsibilities going forward.
4. All legal or other processes filed or to be filed against the overseas corporation are null and void.
5. To clear of any charge or exonerate from any verdict, judgment, or view.
6. A debt, an injunction, or a responsibility that has been filed against the foreign corporation, its authorities, or its shareholders. IX. Time Limit The foreign firm must submit the list to Cyprus Registrar within six months of receiving its preliminary registration certificate, with the option of extending the deadline by three months. It is a document that certifies that a business has ceased to be registered in the country or jurisdiction in which it was originally formed; it is also known as a Certificate of Discontinuance and requires an apostille.
Please provide evidence that the company is no longer registered in the country where it was founded. The certificate of temporary continuation in Cyprus. Important Note The business can’t be listed as an active entity on any other country’s registration until the Cyprus Registrar issues the Temporary Certificate of Continuation. Currently, it must exist in its entirety. Upon obtaining the Temporary Certificate of Continuation in Cyprus, a request may be filed to cancel the company’s foreign register registration. X. Documentation showing the deletion of a prior registry entry. The Cyprus Registrar may take the following action if the proof described above is not provided that the foreign company’s registration in the foreign State has been revoked: The name of the offshore firm should be removed from registration, and the jurisdiction where the company is based should be informed. During the next three months, he should be able to complete the necessary paperwork. It is not possible to provide another timeframe. XI. Final Certificate of Continuation The Cyprus Registrar will issue a certificate of continuation following the production of a certificate of discontinuance from the country of incorporation as confirmation that a foreign corporation has ceased to be registered in the Republic of Cyprus. In order for the re-domiciliation process to be completed after all essential papers have been submitted, it is essential to remember that the Cyprus Registrar has the option to request additional documents. XII. Cases in which the re-domiciliation requests of foreign corporations in Cyprus have been denied: – When a foreign company is in the process of liquidation. A liquidator, receiver, or special administrator has been appointed to manage its assets. The rights of creditors have been curtailed by a court order or decision. The legal process for violating the law in its jurisdiction has already begun. RE-DOMICILIATION OF CYPRUS COMPANIES ABROAD I. Re-domiciliation inquiry in a foreign country To re-domicile, a Cyprus company must be registered in accordance with Cap. The Registrar of Cyprus Companies must approve the application, and the overseas authority must allow this re-domiciliation.
II. Specific documents are required by the Cyprus Registrar. The ME2 Form must be accompanied by a declaration signed by two directors of the company for the Cyprus Registrar to allow the re-domiciliation of a Cyprus company abroad. Name of the firm under which registration is sought in the foreign country. The location of registration and the name of the regulatory authority in the other country. Re-domiciliation date proposed for the company. III. For the Cyprus Registrar to approve the re-domiciliation, several requirements must be met. The following conditions must be met in order for a Cyprus corporation to be approved for re-domiciliation: The shareholders must pass a special resolution authorizing the transfer of the company’s domicile· The Cyprus Registrar must verify that the interim income reports are genuine original copies before a shareholder meeting to approve re-domiciliation. It is necessary to submit to the Registrar an exceptional resolution and interim income reports. The ME3 Form must be signed by two directors, or one director alone, certifying that the company’s solvency will not be jeopardised within a three-year period, and filed with the Cyprus Registrar. An authorisation letter from the competent authorities issuing a license for such an activity should be provided, allowing the company to continue operations outside of the country. In the event that the company is a public company and its dividends are recorded on any recognised stock exchange, the stock exchange and Cyprus financial market commission must provide authorisation. The following costs and processes are required to be followed. According to section 113 of the Companies Law, among others. The application fee must be paid in full. A liquidation, insolvency, restructuring, ex*****on of a court ruling, or other similar actions have not yet been initiated against the company. In accordance with the Companies Act, the corporation should not have breached its responsibilities at the time of application.
Cyprus requires all corporations to pay their taxes and customs fees to the appropriate authorities to operate there. On February 12th, 2021, the new consolidated form ME2 was adopted, replacing the earlier forms ME2 and ME3. IV. Liabilities Failure to prove that a director has knowledge or should have the ability to support the claim is punishable by up to one year in prison and a fine of up to Euro 34.172,00 when proven guilty. V. The rights of creditors To get the Registrar’s consent, the firm must wait three months after publishing an announcement in two widely circulated daily newspapers indicating its intention to relocate to Cyprus. A copy of this publication must be provided to the Registrar within 14 days. A court must evaluate the merits of an application made by a firm’s creditor to prevent re-domiciliation and decide whether or not to accept it. If the court sees fit, it may either allow or reject the re-domiciliation or set its limitations. VI. The Registrar gives consent. In the case that the requirements have been met and no objections have been raised within three months, or if a complaint has been raised and the judge has denied the approval process, the Cyprus Registrar will approve the company’s relocation request. After reviewing the application and any supporting evidence for approximately four months, the Cyprus Registrar will issue a permission certificate. VII. Strike-off from the registry A foreign jurisdiction issues a certificate of continuation by removing a company from registration, giving a strike-off certification, and publish appropriate information in the Government Gazette of the Republic of Cyprus. A copy of the certificate of continuation is provided to the Registrar of Companies. As soon as the firm’s re-domiciliation outside Cyprus has been completed, it is no longer considered a Cyprus-registered corporation. It should be noted that the continuation certificate must be a genuine true copy issued by the foreign jurisdiction and authorised by the appropriate authorities with an apostille. The proper competent authority should perform the legalisation of a document unless the foreign jurisdiction is a member of an apostille convention. In dealing with dissolved firms, it is crucial to keep the following in mind: If a corporation has been dissolved, do not revoke or otherwise impair the authority of any state court concerning any proceeding initiated by or against it before its deletion. Does not affect the company’s current or future assets.
As a result of any action brought against the firm, the judgment or conviction does not absolve the company from any judgment, conviction, opinion, order, debt, responsibility, or obligation that is due or will become due. VIII. Registry of Re-Domiciled Companies All firms in Cyprus that have been granted permission to change their country of abode to another country are kept on file by the Registrar. For any queries regarding any aspect of re-domiciliation in Cyprus for Europe in general, or any other legal matter our Accountants and Lawyers are always at your disposal for further Advise Tax residency by the establishment of Cyprus entity One of the most popular ways to become a Cyprus Tax Resident is by registering your own private company, which employs you. By establishing a Cyprus Company foreign individuals can obtain work permits and tax residency certificates (Cyprus non-domiciled tax status) from the authorities. This option allows the expatriate shareholders and employees of the company to apply for residency status. A Cyprus Company or business offers many tax and business possibilities. This includes a low corporate tax of 12.5%, 100% foreign ownership, no exchange restrictions, free profit repatriation, all benefits accruing from Cyprus’ nearly 55 double tax treaties, etc. If you want more information on how to become a Cyprus tax resident, please contact us by email and/or WhatsApp.
