INTRODUCTION AND TAX ESSENTIALS IN CYPRUS

Since its accession to the European Union in 2004, Cyprus has established itself as a premier destination for investment, continuously enhancing its position as a competitive global hub for finance, tourism, retirement, and relocation. With a strategic location, a highly skilled workforce, modern infrastructure, reliable communication networks, and a stable legal system based on English Common Law, Cyprus offers an exceptional environment for both business and personal growth. This is further complemented by a favourable cost of living, a warm climate, and the renowned hospitality of its people.

The Government of Cyprus has long implemented policies designed to attract foreign investment and individuals to the island. Among the most significant of these policies are the "non domicile" status and the 'First Employment exemptions', which position Cyprus as one of the leading jurisdictions for High-Net-Worth Individuals seeking an ideal place to reside.

Furthermore, the recently implemented tax reform has further modernized the Cypriot tax system, enhanced competitiveness, and ensure a fairer distribution of the tax burden. The Cypriot government has introduced a series of measures that affect both businesses and individuals, including new provisions for the taxation of income, dividends, and corporate profits.

Herein, we present a summary of the principal tax considerations that an individual intending to relocate or retire in Cyprus will encounter.

This outline focuses on the tax considerations applicable to individuals and does not address those relevant to legal entities. For information pertaining to legal persons, please refer to our other relevant publications on corporate taxation.

OVERVIEW OF THE TAX SYSTEM: MAIN HIGHLIGHTS

NON-DOMICILE RULES FOR INDIVIDUALS

Individuals who are tax residents in Cyprus but do not have a Cyprus domicile, are exempt from Special Defence Contribution (SDC) tax on:

• Dividends (5%);
• Passive Interest (17%/3%); and Domicile Status

A Cyprus tax resident who has remained in Cyprus for at least 17 out of the last 20 years, will be considered domiciled for SDC purposes, and so be subject to the applicable SDC tax rates, irrespective of their original domicile of origin.

Duration of Tax Benefits

The SDC exemptions available to individuals who are residents but non-domiciled in Cyprus, are granted for a maximum period of 17 consecutive years (Please refer to Section E below).

‘FIRST EMPLOYMENT’ INCOME TAX EXEMPTIONS

• 50% exemption on gross remuneration:

Under the island’s expanding investment strategy, a revised tax deduction scheme is available to ‘high-earning’ individuals relocating to Cyprus, in an effort to attract high-calibre professionals to the local work force.

Following the amendment to the Income Tax Law, approved on 30 June 2023, individuals with employment income in Cyprus exceeding €55,000 annually (in the first 12 month period) are eligible for a 50% deduction from income for the first 17 years of employment.

To qualify, the individual must not have been a Cyprus resident for at least 15 consecutive years prior to beginning their first employment in Cyprus.

Additionally, individuals who started employment in Cyprus between 2012 and 2021 may still be eligible for this deduction, subject to certain ‘grandfathering’ provisions.

• 20% or €8.550 exemption of the remuneration earned, whichever is lower:

Prior to the 26th of July 2022, individuals moving to Cyprus for both residence and employment were eligible for an annual allowance, for up to five years following the start of their employment, equal to the lesser of €8,550 or 20% of their salary.

This scheme was enhanced in 2022 as part of the new Cyprus investment strategy.

As of 26 July 2022, employees who for three consecutive years immediately prior to the commencement of their ‘First Employment’ in the Republic, were employed outside the Republic by an employer who is not a resident of the Republic, can now claim a 20%/€8,550 deduction for up to seven years, starting from the year after their employment begins. We note that such individuals will need to be able to demonstrate that they had remained in salaried employment positions for three consecutive tax years immediately prior to taking up employment in Cyprus. This exemption is available for employments commencing up to 31 December 2027.

CTD

In an effort to encourage the relocation of Cypriot talent from abroad, following the so-called ‘Brain Drain’ which took place after the economic crisis that shook the island in 2013, the CTD has provided new tax incentives. To this respect, the “Minds in Cyprus – The Brain Gain Initiative” aims to attract highly skilled professionals, scientists and business persons of Cypriot heritage back to Cyprus, so they can bring with them their newly acquired knowledge, experience and expertise, to boost the local economy.

In order to do so, the ITL has been amended with the introduction of a new sub-Article 8(21)B, which is similar to the ex-pat relief (20%/50% exemption provided to foreigners), but targeted to Cypriots working abroad.

More specifically, an exemption equal to twenty-five per cent (25%) of remuneration from employment exercised in the Republic or profits derived from the carrying on of any business in the Republic is granted, up to a maximum annual exemption of €25,000.

The provisions of this subsection apply to individuals who relocate to Cyprus and meet certain conditions, including minimum income thresholds, prior non-residency in Cyprus, and employment or business activity abroad. More specifically, the individual must not have been a tax resident of Cyprus for at least seven (7) tax years immediately preceding the year of commencement of employment or business in Cyprus, must have been a tax resident of Cyprus in any year prior to that period, and must satisfy the relevant conditions relating to employment or business activity outside Cyprus for the prescribed period.

It is further provided that the exemption is granted in the year of commencement of employment or business and for the following six (6) tax years, subject to conditions, is granted once per individual, and cannot be combined with the existing 20% exemption.

OTHER KEY TAX EXEMPTIONS

• 100% exemption on profits from the sale of shares;

• 100% exemption on retirement lump sums received;

• capital sums from approved life assurance policies and provident or pension funds;

• 100% exemption on income derived from employment services provided overseas to:

  • a non-resident employer or

  • a permanent establishment of a resident employer for a duration exceeding 90 days but less than 183 days within the tax year;

• 100% exemption on foreign exchange (FX) gains, with the exception of FX gains arising from trading in foreign currencies and derivatives;

• 100% exemption on salaries of officers and crew of ships owned by a Cyprus shipping company sailing under the Cyprus flag and operating in international waters; and

• 100% exemption on income from a qualifying scholarship, exhibition, bursary, or similar educational grant.

CAPITAL GAINS TAX (CGT)

Cyprus does not impose capital gains tax, except for a 20% CGT on capital nature gains (based on ‘Badges of Trade’) derived from the sale of real estate situated in Cyprus, or from the sale of shares in companies that directly or indirectly own real estate in Cyprus. In such cases, the taxable gain is determined by the portion of the gain related to the real estate. (See Section H Below).

RENTAL INCOME

Rental income derived from Cyprus sources or abroad by a Cyprus tax resident individual is subject to personal income tax at the applicable marginal rates, whilst a flat 20% deduction is permitted. Additionally, capital allowances are available at the rate of 3%

p.a. on the cost of acquiring the property, whilst interest expenses on loans specifically financing the purchase of the property may be deducted. It is noted that, for tax compliance purposes, rental payments are required to be made through electronic means.

As from 1 January 2026, rental income is no longer subject to SDC.

PENSION RECEIVED FROM ABROAD

Foreign pension income is subject to a specific tax regime, where the initial €5,000 per year is exempt from taxation. Any amount exceeding this threshold is taxed at a reduced rate of 5%, provided it qualifies for this special taxation scheme. Alternatively, individuals have the option to elect to be taxed according to the standard income tax rates on their foreign pension income. In practise, individuals may assess their position annually and elect accordingly. Kinanis LLC remains available to assist with this process upon request.

SUCCESSION TAXES

Cyprus does not impose any inheritance or other similar taxes.

TAX PAID ABROAD

Tax relief or credits for taxes paid in other countries may be granted through the provisions of a double tax agreement or, alternatively, through unilateral relief.

 HOW TAX RESIDENCY IS DETERMINED FOR INDIVIDUALS

The Cyprus tax system may impose taxes only on tax residents of Cyprus or individuals who derive income from sources within Cyprus.

1. Tax Residents in Cyprus:

Tax resident of Cyprus, in the case of a physical person, means:

1. 1. 183 Days Rule: Any individual who resides in Cyprus for one or more periods which exceed in total 183 days in the tax year (same as calendar year), or

   2. 60 Days Rule: Any individual who stays in Cyprus for at least 60 days in the year of assessment, provided that:

      1. The individual does not spend more than 183 days in any other single jurisdiction; and

      2. The individual maintains a permanent residence in Cyprus which can be owned or rented; and

      3. The individual conducts any business or is employed in Cyprus or is a director in a Cyprus company as at the 31st of December in the year of assessment.

Further Clarifications and Special Circumstances on Cyprus Tax Residency:

Fiscal Year Definition: The "fiscal year concerned" refers to the fiscal year of the Contracting State where employment services were performed. Taxation may apply to remuneration in a different year from when services were rendered, depending on the relevant 12-month period, even if it spans two fiscal years (OECD Model Tax Convention on Income and on Capital - Commentary on Article 15, Paragraph 4.1).

Scope of Taxation: All Cyprus tax residents, as identified above, either Cypriots or foreign nationals, are taxed in Cyprus on their worldwide income accrued or derived from all sources, both in Cyprus and abroad. A person who is a tax resident of Cyprus

but the place of domicile remains outside Cyprus can enjoy significant tax benefits as analysed in Section F below. It is noted that Cyprus tax resident individuals are generally required to submit an annual income tax return, irrespective of income level, subject to the applicable provisions of the law.

Cyprus tax residents are subject to the below types of taxes/deductions on income:

1. Income Tax (Analysed in Section D);

2. Proposed Tax Reform Overview (Analysed in Section E);

3. Special Defence Tax (Analysed in Section F);

4. Social Insurance Contributions (Analysed in Section G);

5. Contributions to the General Healthcare System (Analysed in Section H);

6. Capital Gains Tax (Analysed in Section I);

7. Indirect Tax (Analysed in Section J); and

8. Other Taxes (Analysed in Section K).

9. Non-Tax Residents in Cyprus:

Individuals who are not tax residents of Cyprus are taxed on income accrued or derived only from sources in Cyprus, if any, subject to the provisions of any Double Tax Treaty in place.

INCOME TAX

Income tax is imposed on an individual’s ‘chargeable income’, where such chargeable income specifically includes the following types of income:

1. Employment Income;

2. Benefits in Kind (for more information, please refer to our publication, “Taxation of Benefits in Kind in Cyprus”);

3. Deemed benefit of 9% per annum on the balance of any amount granted by a company (as a loan or any other financial facility) to its individual shareholders or directors or their spouses or relatives up to the second degree for non-business purposes:

4. Business Income (as a sole trader);

5. Royalty Income from Intellectual Property;

6. Active Interest Income;

7. Pension and Annuities;

8. Profit from Crypto Trading;

9. Rental Income from Property (either in Cyprus or abroad); and

10. Trading Goodwill.

1. 1. Obligation to submit personal income tax returns (TD1):

The obligation to prepare and submit an Income Tax Return for individuals (form TD1) arises, as from the 2026 tax year, for individuals who have gross income falling under Article 5 of the Income Tax Law (N.118(I)/2002), as well as for Cyprus tax resident individuals who have reached the age of 25 but not

71 by 31 December of the relevant tax year, regardless of income level. Personal Income Tax Returns are prepared and submitted electronically only via the TaxisNet system.

1. 2. Obligation for Individual’s to submit annual Audited Financial Statements:

Cyprus tax residents or non-Cyprus tax residents who generate gross income in Cyprus from carrying out business activities (i.e., having Business Income as sole traders) which equals or is in excess of €120.000 per annum, are obliged to prepare and submit annual audited Financial Statements to the Tax Department and issue invoices and receipts in connection with the transactions and collections.

Cyprus tax residents or non-Cyprus tax residents, generating total gross income less than €120.000 per annum, are not required to prepare and submit audited financial statements, but are still obliged to maintain proper books and records.

Kinanis LLC remains available to assist with your personal income tax returns, upon request.

Individual Income Tax Rate Brackets:

The following tax rates apply for physical persons who are tax residents of Cyprus, noting that the tax-free threshold has been increased to €22,000 as from the 2026 tax year.

The law provides for some expenses to be deductible from a physical person’s taxable income. The list of such expenses can be found in Schedule 1 of this publication.

Further, there are some types of income which are exempted from taxation which can be found in Schedule 2 of this publication.

Tax credit relief is granted unilaterally under conditions, if on a particular income, taxation has already been paid abroad provided that the taxpayer provides the tax authorities with the original tax receipts evidencing the payment of such foreign tax.

Special Tax Treatment on Specific Types of Income

1. 1. 1. Cyprus Tax Residents

Pension income generated from abroad - Cyprus tax residents generating pension income from services rendered abroad are liable for 5% tax on the income exceeding €5.000 per annum. The taxpayer has the right to choose to be taxed either in accordance with the special treatment of taxation mentioned above, or under the individual income tax rates as indicated on the above table.

Individuals employed in the fund industry – Cyprus Tax resident employees who operate in the fund industry and generates variable remuneration connected to a carried interest, may be taxed at a flat rate of 8% on amounts constituting carried interest with a minimum tax liability of

€10.000 per annum (conditions apply). Qualifying employees have the option to choose to be taxed under this special treatment of taxation on an annual basis for a 10-year period or otherwise to be taxed under the individual income tax rates as indicated in the above table.

Crypto trading profits -The Tax Reform package introduces a dedicated framework for the taxation of Crypto-assets, establishing a clearly defined regime and rules intended to provide legal certainty, while supporting innovation and the sustainable development of the digital assets sector in Cyprus.

Firstly, we note that Crypto profits are defined as per Paragraph 5, Section 1, Article 3 of the relevant EU regulation [EE]2023/1114, whereby the definition of ’Crypto-assets’ means a digital representation of a value, or of a right that is able to be transferred and stored electronically, using a distributed ledger or similar technologies. Any profits arising from the trade of such Crypto Assets are taxed at a flat rate of 8%, though losses from crypto trading cannot be carried forward or surrendered, but can only be used in current tax year.

More specifically, we note that Crypto asset transactions include any direct sale, donation/contribution, exchange of Crypto assets for other Crypto assets, as well as the use of Crypto assets as a means of payment. One key exemption however, is that for transactions involving Crypto assets which were acquired as part of mining activities, as these remain subject to the general provisions of the ITL.

1. 1. 2. Non-Cyprus Tax Residents

Income generated from intellectual property rights – A non-Cyprus tax resident generating gross income arising from intellectual property rights or other similar income from sources within Cyprus, is subject to a 10% withholding tax (unless a tax treaty provides for a lower tax rate).

Profits of entertainers – The Gross income derived by an individual who is not resident in Cyprus from entertainment events (i.e., musical/theatrical performances, football clubs’ performances etc) executed in Cyprus and which does not arise from a permanent establishment in Cyprus, is subject to a 10% withholding tax (unless a tax treaty provides for a lower tax rate).

Income from Oil & Gas related activities – The Gross income derived by an individual who is not resident in Cyprus from Oil & Gas related activities carried out in Cyprus (i.e., exploration or exploitation of the continental shelf, subsoil or natural resources, installation and exploitation of pipelines etc) and which does not arise from a permanent establishment in Cyprus, is subject to tax at the rate of 5% (unless a tax treaty provides for a lower tax rate).

Income from technical assistance - The gross income derived by an individual who is not resident in Cyprus from technical assistance services provided in Cyprus is subject to a 10% withholding tax. The withholding tax does not apply if the services are provided by a permanent establishment in Cyprus.

New Deductions for Individuals (as from 2026)

As part of the Tax Reform, new targeted tax deductions have been introduced for individuals, aiming to support families, address housing costs, and promote environmentally sustainable investments. These deductions apply subject to specific income thresholds and compliance requirements.

More specifically, the following deductions are available: Family-related deductions:

A new tax deduction is granted to individuals with dependent children, as follows:

€1,000 for the first child, €1,250 for the second child, and €1,500 for each subsequent child.

Housing-related deductions:

A tax deduction of up to €2,000 per individual is available in respect of either interest payments on loans used for the acquisition or construction of a primary residence in Cyprus, or rental expenses relating to the primary residence.

Green economy incentives:

A tax deduction of up to €1,000 per individual is granted in respect of qualifying capital expenditure, including improvements in energy efficiency of a primary residence, installation of renewable energy systems (including energy storage), and the acquisition of an electric vehicle.

It is noted that the above deductions are subject to specific eligibility criteria, including income thresholds, proper documentation, and compliance with tax filing obligations.

SPECIAL DEFENCE CONTRIBUTION (SDC)

In 2015 the notion of Domicile was introduced into the Special Defence Contribution Tax. With this introduction, Cyprus tax resident individuals are classified either as Resident and Domiciled in Cyprus, or as Resident but not Domiciled in Cyprus. The term “Domiciled in Cyprus” is defined as an individual who has a Domicile of Origin, in accordance with the Wills and Succession Laws of Cyprus, but it does not include:

1. An individual who has obtained and maintains a Domicile of Choice outside Cyprus in accordance with the Wills and Succession Law, provided that the individual was not a Cyprus tax resident for a period of 20 consecutive years preceding the tax year under examination; and
2. An individual who has not been a Cyprus tax resident for a period of at least 20 consecutive years before the commencement of the law.

A physical person who is considered as Cyprus tax resident as defined by the Income Tax Law for at least 17 years out of 20 years period preceding the year of assessment, is considered as “Domiciled in Cyprus” for SDC purposes, and will therefore be subject to the relevant taxation if and when this condition is satisfied. In other words, the benefits granted to Resident but Non-Domiciled individuals will be enjoyed for 17 consecutive tax years, which can be extended under the new regime.

1. 1. Cyprus “domiciled” & tax resident individuals:

Such physical persons will be subject to SDC. The tax rates are as follows:

1. 1. 1. Dividends 5%;

      2. Concealed Dividend Distribution 10%

      3. Passive interest 17%;

      4. Trading Interest – Nil (this type of interest is subject to income tax at the above indicated rates mentioned in section C);

      5. Interest received by an individual from Government Savings Certificates, Government Bonds and Corporate Bonds 3%;

      6. Interest earned by an approved provident fund 3%; and

      7. Interest earned by the Social Insurance fund 3%.

A Tax credit relief is granted under conditions, if on the particular income, taxation has already been paid abroad provided that the taxpayer provides the tax authorities with the original tax receipts, as above.

1. 2. Concealed Dividend Distribution (CDD) – 10%

As from 1 January 2026, new Concealed Dividend Distribution (CDD) rules have been introduced, aiming to address situations where shareholders benefit from company assets without triggering a formal dividend distribution. Under these provisions, where a Cyprus tax resident individual (for SDC purposes) uses assets owned by a Cyprus company for personal purposes, without a business element, a deemed distribution is considered to arise. Such deemed distribution is subject to SDC at the rate of 10%, calculated based on the market value of the relevant asset and the extent of its private use. These rules are intended to prevent the avoidance of dividend taxation through the indirect use of company-owned assets

1. 3. Non-Dom Extension Regime

As part of the Tax Reform, a new non-dom extension regime has been introduced, providing additional flexibility to individuals whose non-domicile status would otherwise expire after 17 years of Cyprus tax residency. Under the new provisions, eligible individuals may elect to extend their non-dom status by paying a fixed annual tax of €50,000, irrespective of the level of income subject to SDC. The extension is granted for an initial period of five (5) years, with the possibility of a further five (5) year extension, subject to the relevant conditions and advance payment requirements. This effectively allows individuals to benefit from the non-dom regime for up to 27 years in total.

SOCIAL INSURANCE CONTRIBUTIONS

Employed and self-employed persons who obtain employment income in Cyprus, are subject to Social Insurance Contributions, from the first euro of such income.

Social Insurance Contributions which are deducted from the emoluments of an employee/self-employed person, comprises of the following:

1. For Employees (i.e. Individuals):

• • Social Insurance at 8.8%

Social Insurance Contributions are applicable on the amount of the annual gross employment income of an employee, up to a maximum annual insurable income of €68.904, €5.742 per month for monthly paid employees, and €1.325 per week for weekly paid employees, for 2026.

Such contributions are withheld by employers on a monthly basis, and are paid on behalf of the employee to the Social Insurance Office, at the end of the month following that in which the deduction are made.

2. For the Employer (i.e. the Company):

Employers are liable to pay contributions for every employee on a monthly basis, directly to the Social Insurance Office, at the end of the month following that in which the contribution relate to.

Any contributions that an employer must pay for each employee, and the applicable rates are as follows:

• • Social Insurance at 8.8%;

  • Redundancy Fund at 1.2% (continues below);

• • Industrial training Fund at 0.5%;

• • Social Cohesion Fund at 2.0%; and

• • Central Holiday Fund at 8% (if not exempt).

Contributions are applicable on the amount of the annual gross employment income of the employee, up to the maximum annual insurable income of

€68.904 for 2026, except for contributions to the Social Cohesion Fund. Any contributions to Social Cohesion Fund are applicable on the total amount of the annual gross employment income (i.e. even beyond the above-mentioned caps).

Employers are eligible to claim an exemption from the Central Holiday Fund, if they offer paid leave benefits to employees, in which case they will need to opt-out.

3. For Self Employed persons (i.e. sole traders):

• • Social Insurance at 16.6%

Social Insurance Contributions are applicable on the fixed insurable earnings, in accordance with the category of business income of the self-employed person, subject to a compulsory minimum and a maximum insurable income, as defined by the Social Insurance Office.

A self-employed person is responsible for the calculation and payment of his Social Insurance Contributions, directly to the Social Insurance Office, on a quarterly basis.

Table summarizing Social Insurance contributions:

*EU nationals (or holder of EU work permits) partly working in, or relocating to Cyprus for a period of up to 2 years, can remain exempt from Cyprus SI, by presenting a valid A1 Certificate from their home EU Member State (and pay SI there).

Kinanis LLC maintains a full scope Social Insurance Department, which can assist with any relevant work upon request, including registration, monthly payments and advice.

GENERAL HEALTHCARE SYSTEM (GHS) CONTRIBUTIONS

As from 1st of March 2019 individuals who obtain income in Cyprus, may have the obligation to contribute to the General Healthcare System (“GHS”), and benefit from the health care services provided.

Contributions are calculated and paid as a percentage on emoluments/pensions, as follows:

Contribution Threshold

The contributions will be deducted from the entire earnings of the individuals (including dividends, rental income, interest income) up to a maximum of €180.000.

The standard contribution rate is 2.65% for individuals. Therefore, the maximum annual contribution is:

€180,000 × 2.65% = €4,770

This ensures that higher earners are not disproportionately affected by the contribution system.

It is further noted that contributions to the General Healthcare System (GHS) are explicitly recognised for tax purposes in determining allowable employee costs, in line with other payroll-related obligations.

Eligibility

All residents of Cyprus, regardless of nationality, are eligible to register with the GHS, provided they are:

• Legally residing in Cyprus; and

• Contributing to the system (either as employees, self-employed individuals, pensioners, or through other income).

Perks of the GHS

Once registered and contributing, beneficiaries are entitled to a wide range of healthcare services, including:

• Primary care from personal doctors;

• Specialist consultations;

• Laboratory tests and diagnostic imaging;

• In-patient and out-patient hospital care;

• Prescription medications;

• Emergency services; and

• Preventive care and vaccinations.

The GHS is designed to ensure universal access, affordability, and high-quality healthcare for all residents of Cyprus.

For more information, please refer to our publication, "The General Healthcare System in Cyprus.”

CAPITAL GAINS TAX (CGT)

There is a 20% tax on gains from the disposal of immovable property situated in Cyprus, including gains from the disposal of shares in non- listed companies, which directly or indirectly own immovable property in Cyprus and in case of indirect disposal, derive at least 20% of their market value from such immovable property.

Disposal of shares of companies listed on a recognised and regulated market does not impose any capital gains tax, even if the company owns immovable property in Cyprus. It is noted that gains from the disposal of shares listed on a non-regulated market may be subject to a lifetime exemption of up to €50,000, subject to the relevant conditions.

A taxable gain is estimated by taking into consideration various factors, as they are specified in detail within the relevant Capital Gains Laws.

Any profit or gains made from the sale of immovable property abroad are not taxable in Cyprus under the local legislation even in the absence of any Double Tax Treaty being in place. This means that residents of a country that does not impose CGT to non-residents, may benefit from selling property after immigrating to Cyprus, and upon acquiring tax residency in Cyprus, where no CGT would be applied on any such foreign gains.

The following transactions are exempt from capital gains tax:

1. Transfers arising on death;

2. Gifts made from parent to child, or between husband and wife, or between relatives up to the third degree of kindred;

3. Gifts to a limited liability company, where the company’s shareholders are members of the donor’s family, and the shareholders continue to be members of the donor’s family for five years after the day of the transfer.

4. Gifts by a limited liability company to its shareholders, whose shareholders belong to the same family, provided such property was originally acquired by the company by way of donation/gift. The property must be kept by the donee for at least three years;

5. Gifts to charities and the Government;

6. Exchange or disposal under the Agricultural Land (Consolidation) Laws;

7. Exchange, provided the gain is used for the acquisition of new property (Roll-Over Relief). The gain derived from the exchange reduces the cost of the new property and the tax is paid when the latter is disposed;

8. Expropriations;

9. Transfer ownership or share transfers in the event of company reorganisations;

10. Transfer of property of a missing person under administration; and

11. Transfer of ownership between spouses, whose marriage has been dissolved by a court order, or in case of transfer ownership between the same persons for the purpose of settling their property, according to the Settlement of Property Relationships between Spouses Law.

Lifetime Exemptions:

Every physical person is eligible to receive lifetime exemptions when disposing immovable property in Cyprus. Lifetime exemptions are deducted from the chargeable capital gain, hence reduces any capital gains tax which may be applicable.

The lifetime exemptions available are as follows:

1. Sale of own residence €150.000 or €450.000 (subject to conditions);

2. Sale of agriculture land by a farmer €50.000 (subject to conditions); and

3. Other sales €30.000.

The lifetime exemptions are granted over the lifetime of a physical person, until fully exhausted. The lifetime exemptions arising from a combination of exemptions cannot exceed the amount of €150.000 in total.

Levy on immovable property disposals in Cyprus

As of 22nd of February 2021, a levy of 0,4% applies on all disposals of immovable property that are within the current control of the Republic (i.e., both trading-nature and capital-nature disposals) as follows:

1. 1. on direct disposal of immovable property, the levy is imposed on the disposal consideration;

2. 2. on disposal of shares of a company which is not listed on a recognised Stock Exchange, and which directly or indirectly owns immovable property, the levy is imposed on the latest general valuation undertaken by the Department of Land & Surveys, relating to the shares of the company that are being sold.

The obligation for payment of the levy lies with the seller.

Kinanis LLC maintains a full scope Properties Department, who in conjunction with our Tax Department, can assist on any CGT matters from both a sellers and buyer’s perspective, including but not limited to due diligence work and property suggestions or selection assistance.

INDIRECT TAX (VAT)

Types of indirect taxes include VAT, excise tax and customs duty (import duty and export duty).

VAT is imposed on the provision of goods or services in Cyprus, on the acquisition of goods in Cyprus from other Member States and on the importation of goods in Cyprus from any place outside the EU countries.

The current VAT rates are as follows:

• 0% Zero rate;

• 5% Reduced rate;

• 9% Reduced rate; and

• 19% Standard rate.

*VAT Registration Threshold of €15,600 within a tax year (same as calendar year)

VAT registered companies are required to prepare and submit quarterly VAT returns, which should be based on accurate and well-maintained accounting records.

Kinanis LLC maintains a fully-fledged VAT Department, who can assist for any VAT matters, upon request.

OTHER TAXES

Other types of taxes, such as Wealth Tax, Inheritance Tax, Succession Law, and Immovable Property Tax, are not applicable in Cyprus.

TAX CALENDAR

Note: In case of late submission of the relevant tax forms and late payment of the tax due, administrative penalties may apply. Indicatively, penalties may range from €100 to €500 depending on the taxpayer, while a surcharge of 5% may apply on late payment of taxes, in addition to applicable interest.

HOW KINANIS CAN ASSIST

• • Preparation, completion and submission of Permanent Residency or other Migration application and relevant supporting documentation;

• • Introduction of real estate agents in Cyprus;

  • Registration with Migration department;

  • Registration with the Tax Department as a resident but non domicile individual;

  • Completion and submission of annual tax returns;

  • Obtaining tax residency certificate;

  • Opening of Bank accounts in Cyprus;

  • Assistance to tax and legal related matters; and

  • Accounting and Payroll Services.

1000. CONCLUDING REMARKS

Relocating to a new country is a significant decision, requiring careful consideration of various factors. In this publication, we provide a brief overview of the potential tax implications and how migration may affect an individual's income.

With thoughtful pre-immigration tax planning, any negative tax consequences can often be minimized or avoided. However, it is essential to carefully assess your personal situation and make informed decisions in advance when planning your tax strategy.

Authors Marios Palesis Partner

Stephanos Charalambous

Manager

Disclaimer

This publication has been prepared as a general guide and for information purposes only. It is not a substitution for professional advice. Therefore, one must not rely on it without receiving independent advice based on the particular facts of his/her own case. Consequently, no responsibility can be accepted by the authors or the publishers for any loss triggered by acting, or refraining from acting on the basis of this publication.April 2026

Schedule 1 - Tax deductions

In general, all expenses incurred wholly and exclusively for the production of taxable income are deductible including the following:

Schedule 2 – Tax Exemptions