Tax residence in Cyprus

Cyprus Tax Residence

For a foreign owner of a Cyprus company, becoming a tax resident of Cyprus is the final “touch of genius”.

The core advantage can be explained as follows:

Cyprus companies already enjoy one of the best business tax environments in Europe. The maximum corporate rate is just 15% (as from 01/01/2026). In many cases the effective tax can go down further to as low as 2.5%. Inward and outward dividends are exempt from tax (subject to some criteria). Most capital gains are no taxable, too. So, a Cyprus company has a good chance of posting impressive after-tax profits.

As the outward dividends are exempt, Cyprus won’t charge a cent on that dividend being remitted to You, the company owner.

Your home country might tax it, though. In your hands, dividend from a foreign company is personal income. Taxable at personal income tax rates. Which could be quite high in many countries.

By becoming a tax resident in Cyprus, You can legally end that injustice. A new tax resident in Cyprus remains exempt from personal income tax on all dividends (not just Cyprus, but also foreign) and interest income for 17 years. Cyprus tax resident is also exempt from tax on realized capital gains from sale of securities and shares. For many international business owners these advantages, properly structured, quite simply mean a tax-free life. OK, large chunk of it anyway…

No wonder the personal tax regime in Cyprus is recognized as one of the most attractive in the entire developed world.

The main advantages of obtaining tax residence in Cyprus, at a glance:

There are several different ways to obtain a Permanent Residence Permit (PRP) in Cyprus. Generally, it is much simpler for a person, who is already a national of another EU country, while more complicated requirements apply to non-EU individuals.

Cyprus Residence for EU nationals

EU nationals can, obviously, rely on the general freedoms afforded to them by the principles of the European Union – in particular, the freedom to reside, work and provide services in any EU Member State without discrimination. Thus, for EU nationals, the right to take residence in Cyprus (same as in any other EU country) is practically guaranteed by the EU Charter. However, certain rules still apply.

EU nationals who spend more than three months in the Republic of Cyprus must register with the Civil Registration and Migration Department in Cyprus. Avoiding such registration is against the law and penalties for filing late applications are applicable.

The following documents must accompany the application:

• Valid Passport or Personal Identity Card.
• Evidence of personal residence in Cyprus (purchase or rent contract).
• In case employment is taken, a copy of the employment agreement and a form (MEU1), which must also be signed by the employer.
• A modest application fee.

Once the application is reviewed and processed, a personal visit to the Civil Registration and Migration Department is required. During that visit, the identity of the applicant is verified and a photograph and biometric data are taken.

The end-result of the Cyprus residence application for EU nationals is the so called “Yellow Slip” – a Certificate of Registration. Depending on the current workload in the Civil Registration and Migration Department, it can take between a week and two months to obtain.

Cyprus Residence for non-EU nationals

For individuals who are not originally from any other EU Member State, acquiring permanent residence status in Cyprus requires more effort and expense. Positive outcome is also not always guaranteed and some applications may get rejected.

For non-EU individuals, the Cyprus permanent residence permit can be obtained through different ways. Some options are stated below:

Option 1: “Fast-track” process, known as Regulation 6(2) Application.

Time to process – about two months.

Requirements are these:

• Buy a newly constructed “first sale” residential property in Cyprus for at least €300,000 plus applicable VAT (rate varies). At least €200,000 must be actually paid at the time of purchase.
• Be able to declare and demonstrate a secured annual income of at least €50,000, originating from outside Cyprus (plus €10,000 for each dependent child included in the application, or €15,000 for the spouse).
• Declare intention not to be employed in Cyprus. Owning a Cyprus company and receiving dividend from it is, of course, permitted, same as any other passive income.
• Have a clean criminal record and be absent from any official sanctions lists of the EU.

Once an applicant has satisfied all of the above requirements, permanent residency application can be submitted to the Civil Registry and Migration Department. Technically, You do not need to be personally present in Cyprus neither in order to satisfy any of the above financial requirements nor at the filing of the actual residence application. All of those steps can be arranged through an appointed representative – which can be our firm or other trusted advisor.

Your permanent residency application in Cyprus can also include, as the case may be, your spouse, your children under the age of 18 (or adult children aged between 18 and 25, provided they are enrolled students in a university or other tertiary institution).

Once the permanent residency application is reviewed (usually within 2 months) and the permit granted, You must visit Cyprus within one year in order to appear before the Civil Registration and Migration Department. At that time, your identity will be verified personally you’re your biometric data will be collected. This will later need to be done every two years.

A Cyprus permanent residence permit, issued to a non-EU national, can be revoked if the holder does not visit Cyprus for a period exceeding two years or in case if the holder has also been granted permanent resident status in yet another country.

Option 2: “Normal track” process, known as “Category F” application.

Time to process – one year, possibly even longer.

Requirements are these:

• Buy or rent a home (house or apartment) in Cyprus. No minimum value requirement;
• Be able to declare and demonstrate a secured annual income of at least €10,000, originating from legal sources outside Cyprus (plus €5,000 for each dependent). Be able to provide supporting evidence that the declared income is reasonably secure and stable, and will be able to support yourself and your family in foreseeable future;
• Declare intention not to be employed in Cyprus. Owning a Cyprus company and receiving dividend from it is, of course, permitted, same as any other passive income;
• Have a clean criminal record and be absent from any official sanctions lists of the EU.

Upon these criteria being satisfied, the application process is the same as already described above. However, the obvious disadvantage of the “normal track” application is that it may take a year or more to complete.

Option 3: Prior legal stay in Cyprus for 5 or more years.

Non-EU nationals who have already stayed in Cyprus for 5 or more years under a Temporary Residence Permit (for example, specialists employed under renewable contracts) may apply for the permanent residence permit on that basis alone, without needing to satisfy any specific financial requirements.

Option 4: Temporary residence permit

A temporary residence permit is valid for one year and can be renewed one month before it expires. It does not allow to be employed in Cyprus but allows to be the owner of a Cyprus company.

The requirements are as follows:

• Copy of valid passport or other travel document with validity of at least three (3) months from the date of the submission of the application;
• Original Clear Criminal Record Certificate from the country of origin or residence;
• Original medical examination certificate of blood tests stamped by a specialist doctor from the Republic of Cyprus;
• Original letter of guarantee from a banking institution the Republic of Cyprus, with a duration of ten (10) years;
• Certificate of Health Insurance for medical care that covers inpatient and outpatient care and transportation of corpse;
• Title deed/purchase document deposited in the land registry or accommodation rental document;
• Evidence that the applicant has sufficient and stable resources, as analyzed below, derived from a stable or satisfactory income of the applicant outside the Republic. Income includes salary, pension, deposits in a bank account abroad, rents, dividends, interest on deposits or by exception from dividends from a company in the Republic;
• Detailed statement of bank account transactions in a financial institution in the Republic of Cyprus, for the last 12 months in case of a renewal or from the date of opening the account in the case of a first permit, showing the foreign remittances in the name of the applicant which in total should not it is less than €2,000 per month or €24,000 per year for one person. This amount increases by 20% for the spouse and by 15% for each child.

Cyprus Tax Residence

Becoming a resident in Cyprus per se does not automatically relieve You from personal tax liability in your previous home country. The next logical step here is to obtain a tax residence status in Cyprus.

Residence status and tax residence status are two different things. They are not necessarily and not always united.

In Cyprus, new residents can and should specifically apply for tax registration. The end result here is a Tax Residence Certificate, with a new taxpayer number, issued by the Cyprus Tax Department.

Having documentary proof that You have taken residence in Cyprus and are also a registered taxpayer in Cyprus, You can then apply to de-list yourself as taxpayer in your previous country of residence. To do that, You will generally be expected to show to the tax authority of your previous home country that You have “moved out” more or less permanently. That normally means that You have no paid employment and no active sources of income in that country, and that You do not spend most of your time in that country. This process of de-registration will be different in every country. Some countries – for example, the US – make it extremely difficult. Some are quite easy.  While we can provide overall guidance, it is strongly advised to take local advice in order to avoid common pitfalls. The ultimate end result of this endeavour should be your de-registration from the database of individual taxpayers in your previous country of residence, meaning that your previous tax authority will stop chasing you for personal income tax on your worldwide income.

We can assist you all along the way

Our firm is qualified to assist You through any stages of the permanent residence application. In particular, we can suggest You the most appropriate residence option based on your circumstances. We know the intricacies of various financial requirements and will assist with the preparation of the application paperwork. We can help find the most suitable property for rent or purchase. We can certainly assist with opening of your bank accounts and, of course, we can establish your business company in Cyprus.

Please CONTACT US and we will be glad to help.