Taxes and tax optimization in Cyprus

In order to take full advantage of the low tax jurisdiction of Cyprus and optimize their taxation, an individual has two options.
• The first option, known as the 183 Days Rule, requires a stay in Cyprus of at least 183 days in a tax year in order to qualify as a Cyprus tax resident.
• The second option is the “60 Day Rule”, which provides an opportunity for an individual to become a tax resident of Cyprus after spending only 60 days in Cyprus and fulfilling other conditions

An individual has the opportunity to become a tax resident of Cyprus under the “Rule of 60 days” if the following conditions are met in the relevant tax year:
• Stays in Cyprus for at least 60 days
• The applicant must be doing business in Cyprus or be employed in Cyprus or be a director in a company registered in Cyprus (with mandatory salary) at any time during the tax year.
• Availability of a company account and a personal account of the beneficiary
• The applicant is permanently resident in Cyprus (either owned or rented).

Personal income tax (Cyprus income tax) operates on a progressive scale from 0% to 35%. The first €19,500 is tax-free.
Income tax rates in Cyprus:
up to 19 500 € – 0%
19 501 to 28 000 € – 20%
28,001 to 36,300 € – 25%
36 301 to 60 000 € – 30%
60 001 € and more – 35%

The IP-Box (Intellectual Property Box) regime in Cyprus is a tax relief intended for companies in the field of intellectual property.
Benefits include a low tax rate on intellectual property income.
Under the IP-Box regime in Cyprus, a special income tax rate is provided.
80% of profits subject to the regime are exempt from tax and the rate is only 2.5%, which is well below the normal income tax rate of 12.5%.

Low tax rates, special conditions for the taxation of income from intellectual property and numerous tax agreements with other countries make Cyprus one of the most attractive places for tax optimization.