The Law Office of George C. Stylianou will guide you through every step of the way to understand how a European citizen will become tax resident of Cyprus .
For European citizens and special citizens of countries where taxation is higher than 12.5% for legal persons, favoring the right of freedom of establishment, we offer both general and tax law provision of comprehensive advisory support to businesses or individuals, the establishment of a company or the transfer of their tax base in Cyprus, taking into account the countries concerned the numerous national specificity, the cases of the intended formation of a company and selection of the appropriate company form.
The identification of the problem of entrepreneurs and, above all, the traders taxed by European citizens has troubled us and we have identified fiscally legitimate means to protect those affected by the excessive bleeding of private wealth. Documentation of tax residence with the submission of the Documentation of Accommodation and Labor where the work, permanent insurance and residence abroad are evidence of change of the tax residence, give us the possibility of finding a tax-free solution.
On the basis of the economic tax procedure in more of the countries in Europe, a foreign resident, if he/she does not acquire real income in his/her country, is not obliged to submit an income tax return. At the same time, the evidence and the cost of acquiring assets do not apply to foreign residents who do not have income in his country.
The concept of tax residence and by extension, that of a tax resident in European country is the principle of a better understanding of the issue of taxation of foreign residents as tax residence determines the place of taxing the income of taxpayers. In accordance with the provisions of the relevant legislation governing income tax resident in a European country, anyone residing in a European country for more than 183 days in the same calendar year is considered to be a resident. Persons who are not residents of their country or are usually resident there are defined as not being taxed on income derived outside of their country .
Documentation of tax residence
As stated in the legislation, natural persons who declare their domicile or habitual residence abroad must provide, together with the income statement, either a Certificate of Tax Housing for the countries with which their country has signed exemption for double taxation or the Documentation for Accommodation and Work . In conclusion, taxpayers residing abroad to benefit from the tax exemption are required to produce supporting documents from which it would appear that they have actually transferred the center of their family life or the center of their working life, their existence and their living conditions relations, abroad.
Cyprus, with the tax system that governs income taxation, as a country with a special tax provision and as a country of the Services, and especially the legal tax exemption, is today able to solve the problem both in cash and in excessive taxation.
With your employment in Cyprus on a Cypriot Company, exclusively yours, as an employee on it, with the sole charge of paying monthly to the Social Insurance Fund contributions of 18% of the declared gross monthly income of one thousand euros, you will have solved the problem of bleeding your property. Any other tax return is not necessary as income below € 20000 per year is tax-free.
Which actions and what documents you need to provide in general is your transition, either family or by yourself, depending on the case, in Cyprus, Nicosia, to apply for a Cyprus residence and work certificate and the opening of an account to the Bank of Cyprus. As necessary in the case of a family transition other than travel registration, marriage and birth certificates must be produced for dependent children, necessarily certified with “APOSTILE” confirmation.
The relevant procedures for the registration of the Cyprus Company and your registration with the Social Insurance Fund and the issue of the residence and work certificate for each interested person should be made after the investigation and evaluation of each case depending on the subjective characteristics and the necessary determinations .
Financial burden
The cost varies from 2,000 to 4,000 euros, depending on the company’s issued capital, as expenses for the Company’s registration and the issuance of an Employer’s Register, and from 600 euros for the issue of each person’s residence and work permit from the Population and Immigration Department, Insurance coverage of medical expenses in case of medical treatment for a period of one year.
Monthly expenses
As the minimum cost for the success of the above planning for a legal tax exemption and liquidity capability, contributions to the social security fund should be paid monthly for each member of the family who may be included as employee in each company. In each company there is the possibility to involve more than one interested party in the company that will employ them, provided there is an agreement and cooperation between the parties concerned. For more detailed and fuller information and assessment of the data and subjective criteria of each case, you should refer to a personal interview by telephone or internet.
The Tax System in Cyprus Corporate Tax:
Cyprus offers a range of tax benefits to companies that carry out business in Cyprus. These advantages derive from the favourable tax regime in Cyprus, which is in line with the Organization for Economic Co-operation and Development (OECD) and the European Union, as well as from the extensive network of double taxation conventions. In short, the main corporate tax provisions are:
- a uniform corporate tax rate of 12.5% the lowest rate in the EU;
- no taxation of dividends or interest payments to non-residents of Cyprus;
- no withholding tax on royalties in respect of the use of rights outside Cyprus;
- Favourable treatment of losses;
- no taxation on permanent establishment outside Cyprus, subject to conditions;
- double taxation agreements with over 46 countries;
- not to impose capital gains tax on the disposal of securities on a recognized Stock Exchange;
- no tax on profits from reorganisations;
- tax-free repatriation of profits and capital
Income Tax of Natural Persons:
Tax resident of Cyprus is a person resident in the Republic for 183 days in the fiscal year. Cypriot tax residents are taxed on income earned both in Cyprus and abroad. In contrast, non-residents are taxed only on their income from Cypriot sources.
The highest tax rate for income is 35% and tax-free income for each tax year is € 19,500.
The following income tax provisions apply to natural persons:
- low income tax;
- no taxation of income from dividends and interest, subject to certain conditions;
- no tax is levied in case of permanent establishment abroad and for salary earned abroad under certain conditions;
- Profits secured by the sale of securities are exempt from taxation;
- loss for the current year and previous years is deducted from taxable income under certain conditions;
- income derived from retirement bonuses, death or injury compensation, provident fund, pension fund or other approved funds is exempt from tax.
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