In Cyprus, the new tax law provides major tax benefits, dynamic growth, and concessions for non-doms.
Those living outside of the United States are free from paying taxes on their dividends, income, investments, interest, and remittances. Among EU member nations, Cyprus has the most ideal tax legislation, making it an ideal location for relocating.
Non-domiciled status in Cyprus is automatically granted to foreigners who shift their tax residence to Cyprus for a maximum of 17 years.
A non-dom tax resident in Cyprus will effectively be exempt from a tax called the Special Defense Contribution, or SDC, on any interest, rents, or dividends. This is regardless of whether such income is derived from sources within Cyprus or is remitted to a bank account or economically used in Cyprus.
Dividends and interest are the most common examples of SDC. In general, dividends and interest are the primary sources of income for wealthy people. Here is a Cyprus Non-dom guide, which can help you to understand the scheme thoroughly.
People can seek exemption from Special Defense Contribution on Interest deduction by submitting the declaration for the exemption. This is found on the Tax Department of Ministry of Finance's website and filed with a bank that deals with them.
In the event of joint accounts, each account holder must fill out and submit a Declaration. It is important to remember that the declaration must be completed and sent to the designated bank by December 15 for the reference year.
As long as the person is in Cyprus for more than 180 consecutive days, they are tax residents. The Special Contribution for Defense Tax applied to dividends, rent, and interest income earned by Cyprus tax residents before implementing the non-domicile tax system (SDC).
The introduction of the "non-domicile" tax status was a critical step. Non-Cypriot citizens who are tax residents are immune from SDC. This is regardless of where their income is produced or transferred, according to a July 2015 legislation.
Individuals whose primary source of income is either dividend or interest income will find the Cyprus non-domicile tax policy especially attractive. Individuals can also take advantage of the capital gains tax exemption.
The Cypriot SDC Law states that profits and bank deposit interest that Cypriot tax residents receive face taxes at 17% and 30%. No matter what source they originate from. Individuals who are both Cypriot tax residents and residents of Cyprus are subject to the SDC tax.
There will be no tax to pay on dividends and interest received by non-domiciled residents in Cyprus. This is as of March 1, 2019, with a limit of €180,000 in yearly dividends and interest will be taxed.
Here are the three basic benefits a non-domiciled person in Cyprus will get:
As of July 16, 2015, profits from international and domestic investments will be exempt from SDC in the amount of 17%. Additionally, dividend income is tax-free indefinitely. As a result, a Cyprus resident non-dom will pay no tax on dividend income.
As of July 16, 2015, a non-dom generating interest income from both international and domestic sources will be exempt from SDC. This is in the amount of 30%. Additionally, interest income is tax-free. As a result, a Cyprus resident non-dom will pay no tax on interest income.
As of July 16, 2015, a non-dom obtaining rental income from properties in Cyprus or overseas will be exempt from SDC of 3%. Rental income taxation will be at the standard rates (following a 20 percent allowance).
There are also other advantages they will get, including the following:
To save money, investors can make use of the Cyprus Non-Dom scheme, which offers several advantages. The initiative intends to implement wide-ranging tax reform to attract more foreign investors and wealthy private persons to Cyprus. This will not only boost economic growth but also establish Cyprus as a leading jurisdiction in the global economy.