Cyprus has been a full member of the European Union since 2004 and a member of the Eurozone since 2008. The strategic position of Cyprus, connecting Europe, Middle East, Asia and Africa gives to the island great opportunities for business and trade.
On the 9th of July 2015, in an effort to enhance the competiveness of the Cyprus Tax system and make it more attractive to foreign investors, the Cyprus Government passed a law introducing the “Domicile” concept through an amendment to the Special Contribution for the Defence (SDC) of the Republic of Cyprus Law of 2002 as amended (‘SDC Law’).
From 16th July 2015 individuals who are Cyprus tax residents but have not lived in Cyprus for 17 of the past 20 years are classed as “Non-Domiciled” and there is no special defence tax (SDC) payable on their income in Cyprus or abroad from:
- bank interest
- rental income
As well as there is no tax payable on any gains arising from the disposal of shares, bonds and other similar financial instruments (including options and rights thereon).
The concept of domicile is distinct from the concepts of residence, nationality or citizenship as an individual must have only one domicile at any given point in time.
An individual is considered to be a resident of Cyprus for tax purposes if is physically present in Cyprus for a period or periods exceeding in aggregate 183 days during the calendar year. He can be tax resident but not domiciled in Cyprus.
From the year 2018 to avoid disclosure of information will become almost impossible.
“Tax evasion is a global problem and requires a global solution. We therefore welcome the new standard for automatic exchange of information between tax authorities developed by the OECD (the Common Reporting Standard). This will provide a major change in our ability to clamp down on tax evasion, which reduces public revenues and increases the burden on those who pay their taxes”. (http://www.oecd.org/tax/transparency/AEOI-early-adopters-statement.pdf)
“Non-domiciled” rules in Cyprus give unique opportunity to a foreign citizen who has procured a tax registration number and address in Cyprus to inform his foreign bank to consider him as tax resident of Cyprus and act according to the law on the exchange of information with Cyprus and not with any other country.
The information above is a brief overview of the new “Non Domiciled” rules in Cyprus, which can be presented in more detail upon request, particularly, with reference to the benefits that can be drawn from having a “Non-Domiciled” tax resident status in Cyprus.