Important Changes to the Cyprus Tax System
To improve and simplify the Cyprus tax system as well as to remain a highly compliant and attractive jurisdiction, various new bills have been passed into new laws by the House of Representatives on 9 July 2015. The new tax related law amendments and deferred bills mainly aim to:
• Harmonise and align the Cyprus tax system with relevant EU guidelines
• Simplifying the Cyprus tax system and making it more attractive
• Strengthening the use of Cyprus companies in international tax structuring
• Make the island attractive as a prime destination choice for persons wishing to invest in Cyprus property (being a main pre-requisite for acquiring the Cyprus permanent residency permit or Citizenship), move to Cyprus permanently along with their families, setting up real business substance and moving key employees to Cyprus. This is achieved by introducing certain tax exemptions or relaxations on property transactions and income from Cyprus employment and the introduction of the ‘non-dom’ status.
• The non-dom status that is being introduced for the first time will also solve many inherent issues that foreign High Net Worth Individuals have when it comes to taxing their worldwide income after they become Cyprus tax residents. Non-doms will be exempted from defence tax which is applicable on Cyprus tax residents on dividends, interest and rental income. This gives scope to foreign persons already residing or who plan to reside or work in the island. It will also help tremendously the tax issues in the cases of foreigners who are beneficiaries to Trusts and subsequently become Cyprus tax residents.