Other Beneficial Features of the Cyprus Tax System for Individuals

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Income Tax Reduction for New Residents in Cyprus

On the 26th of July 2022 the long-anticipated tax incentives for individuals have been implemented. As per the new provisions of the income tax legislation, a 50% exemption for income in relation to first employment in Cyprus is now available for individuals with annual remuneration in excess of EUR 55.000 (previous threshold EUR 100.000). This exemption will be available for a period of 17 years.

Low Tax Rate: Foreign Pensions

The first €3,420 of a pension from employment outside Cyprus is tax free, and kuwait mobile database individuals can elect to pay only 5% income tax on pension income in excess of this amount.

Cyprus’ Standard Income Tax Rates are:

€0 to €19,500: 0%;
€19,501to €28,000: 20%;
€28,001to €36,300: 25%;
€36,301to €60,000: 30%;
Greater than €60,000: 35%;
The Definition of Residence and Non-Domicile in Cyprus for “SDC” Purposes
An individual is considered as tax resident in Cyprus if they spend more than 183 days in any one calendar year there. Prior to the introduction of the Non-domicile tax regime, income received by Cyprus tax residents from dividends, rent and interest, was subject to the Special Contribution for Defence Tax (SDC).

This is why the introduction of the “non-domicile” tax status was so important. The law of July 2015 specifies that tax resident individuals, who are non-Cyprus domiciled, are completely exempt from SDC irrespective of where their income is generated or remitted from.

The Cyprus non-domicile tax regime is therefore particularly interesting for individuals whose main source of income is either dividend or interest income. In addition, individuals can take advantage of the exemption from taxation on capital gains.