Cyprus is an island country in the Eastern Mediterranean, it is one of the best places for living and doing business, it is a country which opts the residency based system of taxation, but if you think you can able to do business in Cyprus coming eventually in the country while living in another country then be aware of the term that your physical presence in Cyprus exceeding 183 days in a tax year will be considered as a tax resident of Cyprus for that tax year, similarly if you are living less than 183 days in a tax year, you will be considered to be non-Cyprus tax resident in that tax year. According to the 60 days rules in Cyprus with respect from 1st January 2017, if an individual is staying in different countries exceeding in aggregate 183 days in the same tax year and is not tax resident in any other country for the same year then he must be considered as a resident in Cyprus in that tax year , with all these the following conditions needed for considering an individual a residency in Cyprus in the tax year.
- The individual is living in Cyprus for 60 days in the tax year.
- An individual is incorporating a business or doing a job in Cyprus with a Cyprus tax resident company at any time during the tax year.
- Having a permanent home in Cyprus.
The calculation of days spent in Cyprus is calculated on the following basis:-
- The day you are leaving the country will be considered as the day outside of the country.
- The day on which you are arriving in the country will be considered as your day in the country.
- The arrival and the departure are on the same day then it is considered as a day in the country.
- The departure and the arrival are on the day then it is considered as a day outside the country.
Benefits of Cyprus Holding Company
- There are many advantages related to tax by opening a holding company:-
- The Cyprus holding company or any other Cyprus Limited Company has to pay the tax at the rate of 12.5% on net profits, this rate is considered as the lowest tax rate in the EU.
- The rules and regulations of Cyprus are generally based on the English common law, which turns in great credibility in business practices.
- The dividends of the shareholders are excluded from the Tax Authorities until they are not tax residents of the governments of Cyprus,
- The Cyprus tax authority charges no tax on revenue from the sale of securities.
- There is no rule to put the tax on the dividends received as a shareholder from other subsidiary Companies.
- Dividends or Royalties paid by Cyprus Company to non-resident shareholders will be effected without cutting any withholding tax.
Living in Cyprus tax-free
There is an exemption of 17 years on the defence contributions and thus the defence levy applies worldwide investment income of individuals who are residents and domiciled in Cyprus, at the following rates:
- Interest – 30%
- Dividends – 17%
- Rental income – 3%
Commonly, you will be considered Cyprus domiciles if you were born in the country or you have been resident for 17 out of the last 20 years.
Why residing in Cyprus is interesting?
Cyprus is the 172nd largest nation in the world which covers an area of 9,251 square kilometres, which includes 9,241 square kilometres of land and 10 kilometres of water.
Looking over its history, it became an independent state in 1960, before this, it was ruled by The United Kingdom. The current population of Cyprus is 1,138,071 approximately, and looking around to the density of the country it comprises 123 people per square kilometre.
Cyprus is divided into two parts which are subdivided into four autonomous zones, along with these the Cyprus Island has two independent British military bases: Akrotiri and Dhekelia. The best part of Cyprus is you do not have to learn Greek to live there because English is a well-known language there.
The economic and financial crises of 2013 had damaged the reputation of Cyprus but looking into the current state of the Cypriot bank is good and there is no such problem in saving your money there.
What are the norms for living in Cyprus today? What are the Non-Dom programs in Cyprus?
The Cyprus tax laws indicate that an individual who is a tax resident of Cyprus under the provisions of the Income-tax law and is a non-dom in the country will be exempt from Special Defence Contribution. (SDC). According to this, the income and dividends earned by individuals who are tax residents and domiciled in Cyprus, have to pay tax at the rate of 17% and 30%. The income from any type of rent is also taxable at the rate of 3% on 75% of the gross amount, hence the non-domiciled individuals have the opportunity to enjoy dividend, interest, and the rental income free from SDC tax in Cyprus. According to a new provision, the rules of the wills and succession law are:-
- A domicile of origin
- A domicile of choice
A person who has the domicile of origin will be treated as “domiciled in Cyprus” for SCD purposes and will be allowed for the following exceptions:-
- A person who has obtained and maintained a domicile of choice outside Cyprus under the provisions of the Wills and Succession Law, it is necessary that the individual was not a Cyprus tax resident for a period of at least 20 consecutive years prior to the tax year in question.
- An individual who was not a Cyprus tax resident for a period of at least 20 consecutive years prior to the entry into force of the introduced provisions.
Notwithstanding of domicile of origin, a person who wants to remain a tax resident of Cyprus for a period of at least 17 years out of the last 20 years is deemed as domiciled in Cyprus for SDC purposes.
How to get a Non-Dom for any Budget?
To get an easy non-dom you just have to register yourself as a self-employed in Cyprus or sign up as a well- to-do-person. It does not cost too high in registering your self employed, there is only a little charge of €1,250 and after paying this you can enjoy the tax advantages of Easy Non-Dom program, it can be possible even if you do not own any company.
After getting a residence in Cyprus you can easily operate your company anywhere in the world, you will also get several advantages of Cypriot residence which are:
- If you had a Company based in the US you only had to pay the taxes on income on English territory and the rest things will remain tax-free.
- The dividends distributions of the company are also tax-free in Cyprus.
Cyprus does not any CFC rules which is the best advantage among all others.
So living in Cyprus you do not have to pay company taxes and along with this the reputation of your company will remain well-known in the world.
The Social Security system in Cyprus
Cyprus is well known in the world for the Social Security systems. Investing the least fraction of your income will result in a huge number of advantages for you.
According to the rule in Cyprus, even after your retirement, you will get more points if you are contributing the same as in any other European State.
The free state medical insurance depends on your contributions to Social Security Systems. The insurance is available to the officials, and persons with incomes below 15,377.41 euros and the families whose annual incomes of up to 30,754.82 Euro.
The contributions are calculated on the gross salary earned by each employee and it is deducted monthly.
There are several benefits of this scheme like marriage benefits, maternity benefits, sickness benefits, unemployment benefits, survivor’s benefits, disability benefits, orphan benefits, old age benefits, single parent benefits, occupational accident benefits and occupational illness benefits. The scheme also contains free medical care and drugs for those who are entitled to a disability pension and to persons who have suffered physical injury as the result of an occupational accident or occupational illness.
Salaried staff are also entitled to all the above benefits, and the self-employed do not get any of these benefits.
How to open a bank account and how to use the local banking system in Cyprus?
The banking system of Cyprus is quite powerful comprises of both the domestic and international banks with subsidiaries and branches and offering the new and technical methods of operating the money related transactions. The banks in Cyprus operates under the universal banking model and gives a diverse range of products and services. The main source of funding for the local banks is still the same that is the deposits of the customers.
As if we look at the banking system of Cyprus numerically it has 36 authorised credit institutions, which consists of 8 local authorized credit institutions, 3 subsidiaries of foreign banks from the EU Member States, two subsidiaries of foreign banks from non-EU countries, six branches of banks from the EU Member States, 15 branches of banks from non-EU Member States and two representative offices,\
With all these, you can easily able to open your account in the bank of your choice and of course, which will become beneficial for you in investing your money.
How to obtain the second nationality in Cyprus
Cyprus has the fastest and assured route for obtaining the citizenship of a European country with its Cypriot citizenship by investment programme. To implement this an investment of €2.0 million in real estate is mandatory. Cyprus has its own unique way of offering citizenship within 6 months with this investment. It allows Cypriot passport and citizenship of an EU country, with the freedom to work, travel, study and live anywhere within the countries, for example, Germany, France and the UK.
Permanent Residency Cyprus
One of the fastest and secured way to get permanent residency in Europe is to invest in real estate. You just have to make an investment of €300,000 into the property to gain the Cyprus resident permit within two months and it will cover your whole family. The family member includes the parents of the applicant, spouse, and dependent children. The residency is permanent and it can be passed down to dependents and spouse.
With the permanent residency, it becomes very easy to travel throughout the European Union, and you just need to travel once in a year to Cyprus. The investment must be needed to made by a company for which the main applicant and spouse are beneficial owners. It is necessary that the investment property must be brand new.
Cyprus has a very good system related to the tax regime for persons and companies living there. Cyprus has a good environment where almost all the citizens speak English and the education system of Cyprus is excellent with lots of new technical facilities for students. There are high standard educational institutions along with the best healthcare facilities.
Holding company in Cyprus
A holding company is also known as a limited liability company which is useful for holding shares in other company, holding company usually does not produce goods or services itself; rather, the main purpose of these holding companies is to own shares of other companies to form a corporate group. if you are thinking to choose a holding company’s jurisdiction, you have to look at all the necessary aspects of the company regarding the tax and non-tax aspects of the holding company.
Cyprus is known for an established international financial centre for holding companies from business and tax perspective.