Tax residency benefits for individuals who qualify the 60 day Rule-Tax residency benefits for individuals who qualify the 60 day Rule-【移投策】

Tax residency benefits for individuals who qualify the 60 day Rule

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2017-08-22

The Parliament of Cyprus has approved on the 14th of July 2017 a bill which grants tax residence status to persons who have spent at least 60 days in Cyprus per year (effective as from the 1st of January 2017) provided that the following conditions are met which has been discussed in my previous article.

 

In brief the conditions are:

 

An individual who:

(a)   does not spend a total of 183 days in another State in the duration of a tax year (< 183 days) and

(b)   is not a tax resident in another State

 

would be considered a Cyprus tax resident if:

 

_   the individual stays in Cyprus for at least 60 days in a tax year

_   is employed or self-employed in Cyprus

_   holds an office in Cyprus at any time during the tax year

_   maintains a permanent resident in the Republic that is owned or rented.

 

The tax benefits

 

The individuals who are tax residents in Cyprus are taxed in Cyprus on their worldwide income with certain exceptions which include amongst others the following:

 

(i) Profit from the sale of securities (for example bonds, debentures, options) is exempt from taxation in Cyprus.

 

(ii) A Cyprus tax resident individual but one who is a non-domicile in the Republic of Cyprus is exempt from taxation in Cyprus on his worldwide dividend and his passive interest income.

 

(iii)Any income which arises from employment which is outside of Cyprus is exempted from Cyprus income taxation provided that the duration of such an employment exceeds 90 days per tax year and

 

 

(iii)An individual shall enjoy 50% discount on his income tax in Cyprus for the duration of 10 years provided that:

 

(a) He is going to be employed in Cyprus and his/her income will exceed €100.000 and

(b) He has not been a tax resident of Cyprus prior to the commencement of his employment in Cyprus.  

 

Currently the income tax rates in Cyprus are as follows:

Taxable income – €

Tax rate – %

Accumulated tax – €

First 19.500

Nil

19.501 – 28.000

20

1.700

28.001 – 36.300

25

3.775

36.301 – 60.000

30

10.885

Over 60.000

35



 

 

 

 

 

Income tax exemptions

 

Available for individuals who were NOT Cyprus tax residents in the year before the year they commence employment in Cyprus.

 

A.     Lowest of:          (i)    20% * annual emoluments or

                                   (ii)    €8.550

 _   Available from 1st of January following the year that employment starts

_   Granted for 5 Years

_   Exemption is applicable up to 2020, and from there on it will be abolished

 

B.     50% deduction of the annual emoluments:

_   For annual emoluments above €100.000

_   Exemption is available immediately

_   Granted for 10 Years

 

 

Furthermore non-domiciled individuals who are Cyprus tax residents shall be exempt from special defense contribution levied on taxation for personal investment income (dividends, interest and rent).

 

For further information on this topic please contact

Ms. Nada Starovlah (nstarovlah@pittaslegal.com) at SOTERIS PITTAS & CO LLC,

by telephone (+357 25 028460) or by fax (+357 25 028461)



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