The President of the Republic of Cyprus, Nicos Anastasiades, announced yesterday (2 July 2015) a series of tax incentives aimed at further boosting the Cyprus economy. These incentives include:
Resident non-domiciled: the introduction of a new tax status, that of the ‘non-domiciled’ resident of Cyprus who be exempted from Special Defence Fund Contributions (on rents, income and dividends) provided that the person is a tax resident of Cyprus;
Capital gains tax exemption: the exemption from capital gains tax on any subsequent disposal of immoveable property bought between the relevant law (i.e. the law introducing these new tax incentives) coming into force and 31 December 2016, and irrespective of when the property in question is disposed of;
Property transfer tax reduction: a 50% reduction in property transfer taxes until the end of 2016;
Single property tax: the introduction of a single, low rate property tax to replace the existing local authority tax and reforming the annual property tax; and
Executive income tax exemptions: significant tax breaks on personal income tax for foreigners taking up employment in Cyprus. Executive earning more than €100,000 per annum will be afforded a 50% reduction in personal income tax and this benefit will endure for a period of 10 years.
New equity and notional interest deductions: Cyprus company effective tax rates can be reduced by a new equity and notional interest deduction.
Verita View:
The purpose behind the tax incentives is to make Cyprus an attractive jurisdiction for wealthy individuals or high earners to move to or work in as well as invest in. The introduction of the concept of the so called ‘res non-dom’ (i.e. resident but not domiciled) person in Cyprus add to appeal of Cyprus as jurisdiction to relocate to.
These tax incentives create significant benefits for foreign purchasers of Cyprus property or such persons looking to take up employment or residency in Cyprus. We believe that these incentives compliment perfectly the very favourable Cyprus Citizenship Programme: Citizenship Programme by which Cypriot citizenship can be obtained. Remember that one of the qualifying assets for this programme is Cyprus real estate so the ability of a non-EU national looking to qualify for a Cyprus visa by acquiring Cyprus real estate to now do so with potentially significant tax savings is very advantageous.
The tax reforms already have the approval of the Council of Ministers and will now be put before the House of Representatives.
If you would like to discuss take advantage of Cyprus as favourable tax jurisdiction in which to live or work, or would like to know more about the Cyprus Citizenship Programme, please contact us
Verita Legal
3 July 2015
