Tax structuring has been a very complicated issue for many years with clients being continuously advised on methods of planning their taxes. With confidentiality eliminated to a great extent and the ability of authorities of each country to request information for all controlling persons in a company at any time, it is a good idea to consider other tax structuring venues. Due to the changes in the procedure of acquiring tax residency in Cyprus, it may be a viable solution to optimise taxes.
Requirements and Advantages of Tax Residency in Cyprus
Non-European nationals can make an application at the Immigration authorities in order to obtain a permanent residence permit in Cyprus. Based on regulation 5 of the Alien and Immigration Regulations of 1972, it can be acquired if the applicant falls under one of the six categories stated in the regulations.
The most common category is Category F. This category includes individuals with an annual income sufficient to ensure a decent living in Cyprus, without having to engage in any business, trade or profession. This income must come from legal sources from abroad and be consistent over time.
Applications are reviewed by the Civil Registry and Migration Department and the Minister of Interior grants the final approval. The procedure is finalized in approximately 2-3 months.
The main requirements in order to acquire the residency permit are the following:
- Copy of a valid passport;
- Copy of a temporary residence permit (if any);
- Original letter from a Cyprus bank stating a deposit of 30,000 euros;
- Curriculum Vitae;
- Declaration of a secured annual income from abroad in amount of at least 30,000 euros;
- Title of ownership or contract of purchase of a property in Cyprus with a minimum market value of 300,000 euros plus VAT;
- Official statement by the applicant and his/her spouse that he/she does not intend to work or be engaged in any form of business in Cyprus;
- Health insurance policy for the applicant and his dependents;
- A duly certified original criminal record certificate from his/her country of residency, for the applicant and his/her spouse;
- A duly certified marriage certificate (official and certified translation);
- Duly certified children birth certificates (official and certified translation);
- Affidavit related to the annual income.
Having a tax residency, particularly in a country like Cyprus, offers many benefits and advantages to individuals. The main benefits and advantages of a tax residency in Cyprus for non-European nationals are the below:
- No tax on income earned outside Cyprus for non-residents
- No withholding taxes on dividends, interest and royalties paid to non-residents
- Any dividend-related income is exempt from income and corporation tax as are profits from the sale of securities
- No capital gains or other taxes from the sale of immovable property situated outside Cyprus
- Double Tax Treaties with almost 50 countries
- Low personal tax rates for individuals with a tax-free amount, significant reduction for first time employment of non-residents in Cyprus and for overseas employment
- EU Directives regarding anti-money laundering activities have been fully adopted by Cyprus
Consequently, a Cyprus tax residence should be considered as an efficient solution in order to optimise taxes and take advantage of the various benefits.
Our team at Eurofast Taxand is in the best position to advise and assist you concerning the matter and any further enquiries you may have. In addition, we can assist you with the relevant application as well as with any other documents required in order to acquire the residence permit.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
