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• Domicile and Tax Residency

Cyprus offers attractive conditions for domicile and residency, particularly for individuals seeking favorable tax treatment. Here's an overview of the concepts of domicile, residency, and the private taxation regime in Cyprus:

Domicile in Cyprus

Domicile refers to the country where a person has their permanent home or substantial connection. There are two types of domicile in Cyprus:

1. Domicile of Origin: Acquired at birth, typically from the father.
2. Domicile of Choice: Acquired by establishing a permanent home in Cyprus and demonstrating the intention to reside there indefinitely.

Residency in Cyprus

Residency in Cyprus is determined by the number of days an individual spends in the country. There are two main criteria: 1. 183-Day Rule: An individual is considered a tax resident if they spend more than 183 days in Cyprus within a calendar year.

2. 60-Day Rule: Introduced to attract more residents, an individual can be considered a tax resident if they meet all the following conditions:

- Spend at least 60 days in Cyprus within the calendar year.
- Do not reside in any other single country for more than 183 days.
- Maintain a permanent residence in Cyprus (owned or rented).
- Engage in business, employment, or hold an office in a company resident in Cyprus at any time during the tax year.

Private Taxation Regime

Cyprus has a favorable tax regime for residents, particularly for high-net-worth individuals and expatriates. Key features include:

Personal Income Tax

- Non-Domiciled Residents: Exempt from Special Defence Contribution (SDC) tax on dividends, interest, and rental income earned both in Cyprus and abroad.
- Tax Rates: Progressive tax rates on income, ranging from 0% to 35%.
- Exemptions and Deductions: Various exemptions and deductions are available, such as 50% tax exemption for income exceeding €100,000 for the first ten years of employment in Cyprus for expatriates.

Capital Gains Tax

- Only applies to gains from the sale of immovable property located in Cyprus or shares in companies holding such property.

Inheritance Tax

- Cyprus does not impose inheritance or estate taxes.

Benefits of Cyprus Residency and Domicile

- Strategic Location: Located at the crossroads of Europe, Asia, and Africa, making it an attractive base for business.
- Double Taxation Treaties: Cyprus has an extensive network of double tax treaties with numerous countries, facilitating tax-efficient cross-border investments.
- Business Environment: A favorable business climate with low corporate tax rates (12.5%), robust legal and regulatory framework, and a skilled workforce.

Steps to Establish Residency and Domicile in Cyprus

1. Residency Permit: Apply for a temporary residence permit (Pink Slip) or Permanent Residency Permit.
2. Establishing Domicile: Purchase or rent property and demonstrate the intention to reside in Cyprus permanently.
3. Tax Registration: Register with the Cyprus Tax Department to obtain a Tax Identification Number (TIN).

Cyprus offers an attractive residency and domicile regime, particularly for individuals seeking tax efficiency and a strategic base for business operations. With its favorable personal income tax rates, exemptions for non-domiciled residents, and lack of inheritance tax, Cyprus is an appealing destination for high-net-worth individuals and expatriates. Working with our experts can help streamline this process, providing valuable insights and tailored strategies to ensure successful outcome.
 

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