how much tax is paid in cyprus?

A lower rate of 9 percent is applied to groceries, books and hotel services. Cypriot VAT is part of the income tax for individuals who are not tax resident in Cyprus. Also in this case, the taxpayer in question may, however, elect annually to be taxed at the normal rates and tax brackets indicated above. Therefore, a person not domiciled in Cyprus who moves to Cyprus would be exempt from this special defence contribution, even if he spends more than 183 days in Cyprus in a tax year.

Non-tax residents are exempt from the special defence tax for all their income, whether of Cypriot or foreign origin. There is a 2.5% tax on royalties received in respect of intellectual property rights held in Cyprus. For an expatriate tax resident in Cyprus, tax is levied on all profits or gains from any position or employment in Cyprus or abroad. For a non-Cyprus tax resident individual, the tax applies to gains or profits from any office or employment in Cyprus only.

All individuals who are tax resident in Cyprus are taxed on all taxable income accruing or derived from all sources in Cyprus and abroad. All you have to do to become a tax resident in South Cyprus is to spend 60 days there without being tax resident in any other country and not spend more than 183 days in any other country. As a tax resident of Northern Cyprus you must pay income tax on all income derived from your activities in Northern Cyprus and on all money you bring into Northern Cyprus from abroad. Foreign-source income from employment is not taxed if the recipient spends at least 90 days in a calendar year outside Cyprus.

To be considered non-domiciled in Cyprus, a person must have a domicile of choice outside Cyprus and must not have been tax resident in Cyprus in the last 20 years preceding the tax year in question. If you are one of the more than 70,000 British expatriates living in Cyprus, it is essential that you understand the Cyprus tax rules you face. Non-domiciled Cyprus tax residents are fully exempt from Special Defence Contribution (SDC) on dividends, interest and rental income, irrespective of their source and where they are paid. If you are an expatriate resident, you will be taxed on your worldwide profits or other benefits from a business, profits or other benefits from office or employment, dividends, interest or discounts, pensions and any rental income derived from immovable property.

Both southern and northern Cyprus offer great tax incentives for expatriate retirees, making them very attractive retirement destinations.

Latisha Busler
Latisha Busler

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