Did you know that you could become a tax resident of Cyprus in as little as 60 days? That’s right! Under the new “60 Days Rule,” individuals who spend at least 60 days in Cyprus each year can qualify for Cypriot tax residency. It has made Cyprus an attractive option for many expats and retirees. We will discuss the benefits of becoming a tax resident of Cyprus, and we will explain how to apply for residency under the new rule.
What Are The 60 Days Rule: A Quick Guide
The so-called “60 Days Rule” is crucial in establishing Cyprus individual tax residency. This rule stipulates that an individual must spend at least 60 days in Cyprus during the 183 days preceding the relevant tax year to be considered a resident of Cyprus for taxation purposes.
In other words, if you want to be a Cyprus tax resident, you must spend at least 60 days in Cyprus during the tax year.
There are a few exceptions to this rule. For example, if an individual is employed in Cyprus and spends more than 183 days working, they will still be considered a Cypriot tax resident. Additionally, there are special provisions for individuals who travel abroad for medical purposes.
The 60 days rule is crucial in determining whether an individual will be considered a tax resident for the following year. If you spend less than 183 days or more in Cyprus during any given calendar year, there could be implications for your tax residency status.
It’s important to note that the 60 days rule is just one factor in residency determination and that other factors, such as an individual’s permanent home, also play a role.
What Are The Benefits Of Becoming A Tax Resident Of Cyprus?
There are several benefits of becoming a tax resident in Cyprus. The main advantage is that you will be taxed on your worldwide income. Live in another country and have earnings from another source outside of Cyprus, for example, property or investments abroad. You can pay tax to the Cypriot authorities rather than spending it on the country in which you live.
Another benefit is that once you become a Cypriot resident, any dividends received from overseas companies will be exempt from tax if they are paid by an overseas company controlled by Cyprus residents and don’t do business in Cyprus. It means that you can keep more of your money.
A further benefit is that once you become a Cypriot resident, any profits made from the sale of shares are exempt from tax if held for at least two years before the date you sold them.
Investment income received by Cyprus residents (such as interest and dividends) is also exempt from tax. It means that you can put your money to work for you while it grows in value without taxing the gains. It means that you could double your investment with minimal effort.
Yet another benefit of becoming a resident of Cyprus is that any pension contributions made by an employer are not subject to income tax. Pension contributions made by employees will be taxed at a rate of 15%, which is still lower than the rates in other countries.
If you plan to move your business to the country, you can benefit from a favorable tax regime for companies. You can also enjoy the benefits of registering your company in Cyprus or keeping it abroad but reporting its business activities and profits in Cyprus, which means that you’ll pay less tax on them than if you reported them elsewhere.
Also, any income by a self-employed individual in Cyprus is taxed at 20%. It is lower than the rates in other countries.
How To Apply For Residency Under The New Rule?
If you are an individual who is not a Cypriot citizen and would like to apply for residency in Cyprus, there is a new rule that you need to know. This rule, which came into effect on January 01, 2018, states that you must reside in Cyprus for at least 60 days within the first six months of your application.
If you have not spent at least 60 days in Cyprus during the first six months of your residency application, then your application will be rejected, and you will need to reapply after six months. However, if this new rule is applied retroactively, it may affect those who already hold permanent residency permits but did not reside in Cyprus for at least 60 days during the first six months of 2018.
If you are a citizen of an EU country or have permanent residency in another Schengen country, you do not need to apply for residency in Cyprus. You will be able to stay and work in Cyprus without any restrictions.
What Are The Benefits Of Residency In Cyprus?
There are many benefits of obtaining residency in Cyprus as an individual who is not a Cypriot citizen and would like to reside permanently. Here are some reasons why you should consider applying for permanent residency:
- You will have the right to live, work, and study in Cyprus without any restrictions.
- You will be able to travel throughout the Schengen Area without a visa.
- You can benefit from the same social security rights as Cypriot citizens.
- You can own property and businesses in Cyprus.
- You will be able to apply for Cypriot citizenship after five years of residency.
What Determines Tax Residency?
You are considered a tax resident of Cyprus if you have resided in the country for at least 183 days during the tax year. It is a basic rule which applies to all individuals and businesses in Cyprus, and it cannot be changed by any person or entity (including governments).
It’s important to note that the 183-day rule does not apply to income generated outside of Cyprus. For example, if you are a tax resident of Cyprus but earn all of your income from sources outside of the country, you will only be taxed on that income following the country’s laws where you made it.
Understanding this new rule will help you to better prepare for your residency application. If you are interested in obtaining residency in Cyprus, then it’s vital that you understand the 60-day rule and what it means for your application.