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Are you a non-domiciled individual looking to relocate to an EU country?

Look no further than Cyprus. With its warm climate, beautiful beaches, and favourable tax laws, Cyprus has become a top choice for those seeking a new home. As a non-domiciled resident in Cyprus, you can enjoy numerous benefits, including a low cost of living, access to high-quality healthcare and education, and a welcoming community.

In this article, we’ll delve into why non-domiciled individuals relocate to Cyprus.

Non-domiciled status concept

Domicile refers to the country or jurisdiction that an individual considers to be their permanent home or main residence. It determines various legal and financial aspects of their life, including tax obligations. In contrast, non-domiciled status is when an individual is living in a country without considering it their permanent home.

People strive for non-domiciled status due to the potential tax benefits it can provide. Many countries, including Cyprus, have tax laws that are more favourable for non-domiciled residents. For example, in Cyprus, non-domiciled individuals enjoy a significant reduction in their tax liabilities compared to domiciled residents. This can be especially attractive for high-net-worth individuals and retirees looking to optimise their tax situation.

To become a non-domiciled individual in Cyprus, one must meet certain criteria. These may include establishing Cyprus as your primary residence, demonstrating that your centre of vital interests has shifted to Cyprus, and being physically present in the country for a certain number of days each year. It’s important to note that while non-domiciled status offers tax advantages, it also comes with certain responsibilities, such as maintaining tax residency and abiding by local regulations.

Cyprus and its appeal

Cyprus, with its charming lifestyle, warm Mediterranean climate, and stunning landscapes, has become an increasingly popular destination. The appeal of Cyprus lies not only in its favourable tax laws but also in its overall quality of life.

The island offers a lifestyle that combines the best of both worlds – a relaxed pace of life with a vibrant social scene. Whether you’re looking to retire or start a new chapter in your life, Cyprus has something for everyone. The welcoming community and friendly locals make it easy to integrate and feel at home.

In addition to its appealing lifestyle, Cyprus boasts beautiful beaches, picturesque villages, and ancient ruins that showcase its rich history. With a low cost of living compared to many other European countries, Cyprus offers excellent value for money. This, combined with access to high-quality healthcare and education, makes it an attractive option for families and individuals alike.

Another key advantage of relocating to Cyprus is the opportunity for tax residency. By establishing Cyprus as your primary residence and meeting the necessary criteria, you can benefit from its advantageous tax laws. This can result in significant tax savings!

Tax Benefits in Cyprus

As a non-domiciled individual considering a move to Cyprus, you’ll be pleased to discover the numerous tax benefits.

Firstly, there is no inheritance tax or estate duty, meaning your assets can be passed on to your loved ones without any tax implications. Additionally, Cyprus does not impose a wealth tax or gift tax, allowing you to maintain your financial independence without unnecessary taxation.

You will be exempt from taxation on worldwide dividends and passive interest income, allowing you to maximise your investment returns. What’s more, if you render salaried services outside of Cyprus for more than 90 days in the same tax year, you will not be subject to income tax on that income. Similarly, if you work for a permanent establishment outside of Cyprus for at least 90 days, any income earned from that establishment will also be exempt from taxation.

For business owners, Cyprus offers a highly attractive corporate tax rate of just 12.5% on net profits, which is one of the lowest in the EU and worldwide. This makes Cyprus a popular destination for international companies seeking a tax-efficient base of operations. Moreover, Cyprus has established extensive double-taxation treaties with many countries, providing additional tax advantages.

In terms of personal income, Cyprus applies a progressive tax system with a tax-free allowance of £17,500 per year. This ensures that you can keep more of your hard-earned money, while still contributing to the local economy. Furthermore, non-domiciled tax residents in Cyprus enjoy exemptions for dividends, bank deposit interest, and rental income, further enhancing the tax benefits of living in this vibrant and welcoming country.

Becoming a Cyprus resident

To become a Cyprus resident and take advantage of the country’s attractive tax benefits, individuals must meet certain criteria. One of the most common ways is by satisfying the 183-day rule. This means spending at least 183 days in Cyprus during the tax year. By doing so, you can establish tax residency in the country.

Alternatively, individuals spend at least 60 days in Cyprus during the tax year and maintain a permanent home there. This rule is beneficial for those who  spend a significant portion of their time in Cyprus without needing to be physically present for the majority of the year.

To become a Cyprus tax resident, it is crucial not to reside in any other country for more than 183 days in a tax year. And to especially avoid being considered a tax resident in another country, otherwise your tax bill could be sky high!

How RHJ Accountants can help

Before making the move to Cyprus, it’s important to ensure that you are not subject to taxation elsewhere. That’s where RHJ Accountants can help.

We have expert accountants in Cyprus who can provide you with a comprehensive understanding of the tax benefits and requirements of becoming a tax resident. Plus a network of accountants in other countries, ensuring that we can assist you in navigating any potential tax implications in your home country. Check out our range of tax services to ensure that you are maximising your tax benefits.

Make sure to check out our website in more detail, or schedule a free initial consultation with our team!

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