CYPRUS INCOME TAX GUIDE
When choosing a country, whether it be
- of Expatriation,
- of Investment,
- of domiciling a business and a company,
- of opening a market,
- to carry out one’s professional activity,
- to transfer one’s pension or
- to be a digital nomad in smart working,
we have developed a model covering
6 macro-areas from the Geo-Political to the Macro-Economic situation, to then identify the well-known fiscal or regulatory issues
both in relation to individuals and to corporate or asset protection structures.
We offer a highly qualified professional advice, to compare the legal, tax, wealth, regulatory, financial, macro-economic, geo-political implications of these choices amongst different jurisdictions, considering the country of choice to be a fiscal resident, to locate assets, to domicile a company
On this page, we discuss CYPRUS, a country to which we are linked professionally and by long experience and direct exposure to the diverse areas of Larnaca, Limassol, Paphos, and the capital Nicosia.
Are you considering moving to CYPRUS for your living, business, and investment choices?
On this page, after a previous guide on the criteria and procedures for residency always referring to Cyprus (read here), we present a schematic guide to taxation in Cyprus for different regimes and income categories.
- FISCAL REGIME AND TAXATION IN CYPRUS
- TAXATION OF FOREIGN PENSIONS
- CORPORATE TAXATION
- DOUBLE TAXATION AGREEMENTS SIGNED BY CYPRUS
- TAX ON REAL ESTATE
- VAT CONSUMPTION TAXATION
- TAXATION OF VIRTUAL CURRENCIES OR CRYPTO IN CYPRUS
- INTERNATIONAL TAXATION
From a taxation point of view, it must first be considered that CYPRUS applies territorial taxation and has a non-dom tax regime like Malta, as mentioned in the page of Cyprus residence regime.
There are basically two taxation systems in the world.
The most widespread tax system is that of ‘worldwide taxation’ which is based on taxation on a worldwide basis according to which income produced anywhere in the world by a resident individual is taxed and not only that produced in the territory of the State. This system is in force in Italy, Spain Portugal, USA, Switzerland, Germany and many others.
Different is the system of taxation on a ‘territorial’ basis which applies to individuals who are not domiciled in a state and who are required to pay tax in their country of residence only on income produced there.
Cyprus adopts this system on a territorial basis.
The taxation of personal income ranges from 20% to 35% with non-taxation up to EUR 19,500.
Non-residents or non-domiciled residents pay no tax on interest, dividends or rental income wherever produced.
|Income tax year (EUR)||Tax rate (%)||Cumulated amount (EUR)|
However, one is considered domiciled for the purposes of such taxation when the person has been a tax resident for a period of at least 17 years in the last 20 years.
In Cyprus, income from foreign source pensions is taxed at a rate of 5%, with an exemption for the first €3,420.
Under many of the current Double Taxation Agreements it is only possible to obtain a gross, i.e. tax-free foreign pension with taxation of the pension in Cyprus at the reduced rates mentioned above.
It is not possible in Cyprus, as in most other countries, to obtain defiscalisation of State or public pensions such as the one for Italian public servants.
For those who want to start a business, the corporate income taxation is also advantageous being at 12.5%.
Cyprus resident companies are taxed on income worldwide, from Cyprus or abroad, or derived from all sources in Cyprus and abroad.
Non-Cyprus resident companies are taxed on income derived from activities in Cyprus.
It is certainly important to know and consult the up-to-date list of double taxation agreements signed by CYPRUS necessary to know the tax regime to be considered for each category of income and assets in order to avoid double taxation for taxpayers in many cases.
There is a tax on real estate of between 3% and 8% depending on the value of the house that has to be paid by the acquirer in case of a transfer of an immovable property.
Capital gains from the sale of real estate are taxed at 20%.
The standard VAT rate is set at 19% with two reduced rates for certain goods at 9% and 5%.
In Cyprus, cryptocurrencies are considered a digital medium of exchange or a virtual currency.
There is no specific legislation on the matter and no guidance has been given by the Tax Department on the handling or taxation of such currencies either.
There is only an anti-money laundering regulation and directive for activities carried out by companies that perform crypto-related services.
There is no specific category where crypto should be included in financial statements. Currently, taxation on trading profits on crypto, as for other financial classes, is zero. This is provided that such activity is not derived from ‘regular’ trading. In this case, income from buying and selling crypto is considered taxable at 12.5 per cent at corporate or applicable personal income rates.
A customized, multi-country Tax consultancy service for the internationalization and protection of individuals, investors and companies, in relation to their income and assets situation.
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Clients are looking for compliance, efficiency, independence, global know-how, speed, therefore we offer:
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with analysis of specific individual needs and identification of opportunities and solutions offered by a re-domiciliation of Individuals, Families, Investors, Companies, or assets to Malta and other 30 different countries, an International Advisory service with solutions and opportunities in and from Malta with respect to your jurisdiction of origin and other countries in Europe or outside Europe:
We offer a highly qualified professional advice, to compare the tax implications amongst different jurisdictions of these sources of Income and investments, considering the Intermediaries involved in the transactions, the location of the Asset, the residence and citizenship of the Owner
For all your legal, tax, corporate governance and residence advice needs for individuals and businesses, contact us here