Cyprus in its plan to attract investments from abroad has approved in 2015 new regulations that provide incentives and free the Tax residents from personal taxes, dividends, interests and rental income in Cyprus.
In addition special income deductions are applied to individuals but also on yearly notional interest deduction on capitals imported to the company.
Find out below how any professional can be benefit with transferring his “physical” residence to Cyprus.
Learn more about exceptions on social contributions, income tax exceptions, but also tax deductions for corporations.
Non-Dom person is a someone who live in Cyprus where he is not legally domiciled in.
Cyprus in 2015 has introduced laws that provide exemption from taxation for personal investment income of non-domiciled individuals. These tax laws only apply to residents of Cyprus for income arising from rents (3% out of 75% of their income), interest (30%) and dividends (17%).
The mentioned tax exemption provides that any person who chooses Cyprus as a country of residence and has Cyprus Tax Identification Number is exempted from withholding tax on income arising from investment capital. The exemption is valid for income derived from Cyprus or abroad.
This exemption is valid for individuals that in the last 17 out of 20 years were not permanent Cyprus residents and now choose to be Cyprus tax residents. Individuals according to the relevant legislation will be entitled to the above deduction for 17 years after the date on which they have chosen Cyprus as their home country and tax residence.
An individual that chooses to use Cyprus as a place for residence, exempts from personal taxes when receiving dividends, interest and rents in Cyprus.
Our tax advisors are always willing to help you to move your residence to Cyprus arranging all the legal procedures needed that will arise, as well as the preparation of your annual tax return.
An individual with annual income from employment of over €100.000, and whose residence was previously out of Cyprus and is now employed in the country, is entitled for 50% tax deduction on his income. This deduction refers to income deriving from Cyprus and is valid for the next 10 years starting on the day of his employment in the republic.
Example table: Annual income from employment of €100.000
The below Table 1 demonstrates the tax that would be applied on income from employment of €100.000 without any deduction. The Table 2 demonstrates the same amount with the deduction applied.
Table 1
|
Salaried Tax Scale |
Tax Rate |
Tax charge on €100.000 excluding deduction |
|
€ |
% |
€ |
|
Up to 19.500 |
Zero |
Zero |
|
From 19.501- 28.000 |
20 |
1.700 |
|
From 28.001 – 36.300 |
25 |
3.775 |
|
From 36.201 – 60.000 |
30 |
10.885 |
|
From 60.001 – 100.000 |
35 |
14.000 |
|
Total |
|
30.360 |
Table 2
|
Salaried Tax Scale |
Tax Rate |
Tax charge on €100.000 with 50% deduction |
|
€ |
% |
€ |
|
Up to 19.500 |
Zero |
Zero |
|
From 19.501 – 28.000 |
20 |
1.700 |
|
From 28.001 – 36.300 |
25 |
3.775 |
|
From 36.201 – 50.000 |
30 |
4.140 |
|
Total |
|
9.615 |
To conclude, the person with income from employment of €100.000 would be taxed with €9.615 or 9,62%.
The advisory team of Belifor is always available and ready to assist you on any procedure and preparation of the yearly tax return.
Cyprus in order to attract more direct investments and import of new capitals to existing establishments grands Notional Interest Deduction on any new capitals imported in the establishment after the 1st of January 2015.
Equity introduced to a company as from 1 January 2015 (new equity) in the form of paid-up share capital or share premium is eligible for an annual notional interest deduction (NID). The annual NID deduction is calculated as an interest rate on the new equity, and cannot exceed 80% of the taxable profit derived from assets, financed by new equity. The relevant interest rate is the yield on 10 year government bonds ( as at December 31 of the prior tax year) of the country where the funds are employed in the business of the company plus a 3% premium (subject to a minimum amount which is the yield on the 10 year Cyprus government bond as at the same date plus a 3% premium).
The amount of notional interest cannot exceed the 80% of the tax income of the company, as this will be identified according to law, before the interest deduction. If Notional Interest is below the 80% of the taxed income, then the whole amount of the interest is deducted.
The tax deduction is applied to Tax Resident companies, as well as to non-Tax Residents owning a permanent office in the republic of Cyprus.