Why Live in Cyprus?
Imagine living on a beautiful island in the Mediterranean, where you can enjoy sunny weather almost every day of the year. That’s Cyprus for you! This island has a fascinating history, having once been a British colony, and now it’s an independent country that’s part of the EU, but with a unique cultural blend of Greek and Turkish influences. Most people here speak Greek and Turkish, but you’ll find English widely used, especially in business settings.
Cyprus is not just a pretty face. It’s a fairly large island with 9,251 square kilometers of diverse landscapes—from stunning beaches and picturesque villages to ancient ruins and the scenic Troodos mountains. Aphrodite’s Rock, the legendary birthplace of the goddess of love, is a must-see. Plus, the capital city, Nicosia, offers a rich mix of culture, art, and history, split into Greek and Turkish sectors that you can explore freely.
The Economy of Cyprus
Cyprus boasts a modern, dynamic economy that has transitioned from agriculture to being service-oriented, driven largely by tourism, shipping, and finance. This transformation means that about 70% of the workforce is in service industries, contributing to 80% of the national GDP. Traditional exports like potatoes and citrus fruits still play a role but are less significant in the big picture.
The economy is stable and growing, making Cypriots some of the most prosperous people in the Mediterranean. This growth has turned Cyprus into a hub for business services, especially for investments into Russia and Eastern Europe. The recent discovery of offshore gas has also boosted the economy. With a resilient labor market and decreasing public debt, the outlook for Cyprus remains positive, with a healthy budget surplus expected to continue.
The Tax System in Cyprus
Cyprus offers a very attractive tax regime, especially for those who become tax residents. To be a tax resident, you need to spend more than 183 days in Cyprus in a tax year. The corporate tax rate is just 12.5%, one of the lowest in Europe. For individuals, the income tax rates range from 20% to 35% depending on your income level.
A unique feature of the Cypriot tax system is the non-domicile (non-dom) status. If you qualify, you can enjoy significant tax benefits. To qualify, you need to be a tax resident for at least 60 days a year, engage in business or employment in Cyprus, and have a permanent residence here. Non-doms are exempt from paying tax on dividends and interest, whether they are from Cypriot or foreign sources. This status is ideal for people whose income mainly comes from capital gains or dividends, and it can last for up to 17 years.
Benefits of Non-Dom Status in Cyprus
Becoming a non-dom in Cyprus means you are a tax resident without being permanently domiciled. This is purely for tax purposes and doesn’t affect your citizenship. The benefits are substantial:
- Dividends and Interest Income: Fully exempt from tax, regardless of where they come from.
- Capital Gains: Generally exempt, except for gains from the sale of property in Cyprus.
- Salary Exemption: If you work outside Cyprus for more than 90 days in a year for a non – Cypriot employer, your salary is 100% exempt from tax.
- Inheritance and Gift Tax: None.
- Property Outside Cyprus: No tax on gains from the sale.
Additionally, new residents can enjoy a 20% exemption on their income tax (up to €8,550) for five years, or a 50% exemption for earnings above €100,000 for ten years. Pensions from abroad are also taxed at a reduced rate of 5% if they exceed €3,420.
Conclusion
Cyprus offers a fantastic blend of lifestyle and financial benefits. With its friendly tax regime, low living costs, and beautiful environment, it’s an excellent choice for anyone looking to optimize their tax situation while enjoying a high quality of life. Whether you’re a digital nomad, an entrepreneur, or just looking for a sunny place to live, Cyprus could be the perfect fit for you.
This article first appeared on Lexology. You can find the original version here.
