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Tax Planning

Tax Planning in Cyprus

Cyprus is renowned for its favorable tax environment, making it an attractive destination for individuals and businesses alike. Whether you're moving to Cyprus for personal reasons or investing in property, understanding the tax benefits is essential to making the most of your decision.

Key Tax Advantages in Cyprus

  • Low Income Tax: Cyprus offers one of the most favorable income tax systems in Europe, with no tax on foreign pensions up to a certain threshold and low tax rates on income earned locally.
  • No Inheritance Tax: Cyprus has completely abolished inheritance and estate taxes, allowing you to pass on assets to your heirs without tax implications.
  • Corporate Tax Benefits: For investors and business owners, Cyprus boasts one of the lowest corporate tax rates in the European Union, currently set at just 12.5%. This makes the island a prime location for international business activities.
  • Double Taxation Treaties: Cyprus has established numerous double taxation treaties with other countries, ensuring that you won't be taxed twice on the same income earned abroad.

Who Can Benefit from Cyprus’s Tax Planning?

  • Retirees: If you're planning to retire in Cyprus, you can benefit from a reduced tax rate on foreign pensions and other income sources.
  • Business Owners: Entrepreneurs and business owners relocating to Cyprus can take advantage of the island's low corporate tax rates and tax incentives.
  • Remote Workers: If you're working remotely, Cyprus offers tax advantages for digital nomads and individuals working from abroad.

Tax Incentives for Property Buyers

When investing in property in Cyprus, you can also benefit from certain tax advantages, including:

  • Reduced VAT on New Properties: Eligible buyers can apply for a reduced VAT rate of 5% on the first 200 square meters of a property intended as their main residence.
  • No Property Transfer Fees (under certain conditions): Depending on the VAT status of the property, buyers may also benefit from no property transfer fees.

Tax Residency in Cyprus

Obtaining tax residency in Cyprus is straightforward, with clear guidelines based on either the 183-day or the 60-day rule, allowing flexibility for individuals who spend varying amounts of time on the island. Becoming a tax resident of Cyprus means you can fully benefit from the country’s favorable tax system.

Explore this section to understand how tax planning in Cyprus can benefit you, and get practical tips on optimizing your financial strategies as a resident or investor. For personalized advice or more detailed information, feel free to contact our team.