As a digital nomad and Expat living in Cyprus interested in Expat Tax, it’s to your advantage to establish a tax base in a low-tax country and then use that as a base to travel around the world. In this article, we will cover why Cyprus is one of the greatest and perfectly positioned for digital nomads.
For those already self-employed or have their own companies, the country offers a dynamic, fresh culture when travels elsewhere are so limited. It provides the financial policies and high-quality infrastructure that keeps digital businesses running smoothly. Combining the quality of life and business start-up with the taxation advantages, digital nomads are more than happy.
Cyprus has a 60-day tax residency rule. This means that you can become a Cyprus tax resident for you expat tax, with its high personal tax allowance, with only 60 days in the country (as opposed to 183 days in most countries). In doing so, it is provided that you don’t spend more than 183 days in another single country. This is the ideal set-up for a digital nomad.
Contractors and the self-employed allow them to become tax residents in Cyprus while working on a contract from abroad with 0% dividends & income tax.
Cyprus boasts a colorful, lush Mediterranean lifestyle combining the cultural, historical, and natural blend of the best of Europe and the influences of Africa, Asia, and the Middle East. For digital nomads, this means there are ample ways to enjoy the country. Culturally, Cypriots are warm and welcoming. It’s beautiful to experience this.
Cyprus is an excellent base of operations, given its strategic geographical location. The weather is a given; the sunshine spreads happiness. Living on an island with over 320 days of sunshine a year can significantly boost your health, wealth, productivity, and happiness.
As Cyprus continues incorporating current initiatives for Start-Ups and the IT industry, digital nomads and expats have access to the latest innovative digital services and opportunities. Aside from the joint ventures already mentioned, Limassol Marina is making significant strides in pushing the city into the top position for technology leadership, hoping to expand the project into the next ‘Technology Wall Street.’
If you’d like to get into the percentages and details about expat tax, we’ve written out bullet points to make it simple.
The preferential tax rate in Cyprus through the incorporation of a company and local and foreign dividends received sits at:
- 5% for corporate income tax (CIT).
- 0% rate for dividends.
- A 2.65% General Health System tax applies to rental, interest, and dividends. This tax will be taken from the first annual income of 180,000 EUR or more. This specific tax will be taken from your first yearly income. Different rates will apply if you’re in a higher or lower income bracket.
Some foreign-sourced income could be exempt from this 12.5% corporate income tax, namely:
- Interest earnings (excluding when interest income is the company’s core business activity).
- Foreign exchange (FX) gains, excluding FX gains from trading in foreign currencies and related derivatives.
- Dividends/Profits paid out by a foreign-owned company to the Cypriot entity.
The Pros & Cons of having your base in Cyprus as a Digital Nomad/Expat
- Preferential tax rates of just 12.5% (CIT).
- For those on the Nomad Visa, family members can also stay in Cyprus for their duration and will be granted a residence permit that expires at the same time as the visa. However, Cyprus prohibits family members from working or engaging in economic activity while there.
- There are significantly low crime rates, a low cost of living, and great weather patterns, and English is widely spoken.
- Only 500 visas are issued annually, although this Is expected to increase.
To conclude, we’d recommend Cyprus as one of the top destinations for Digital Nomads, Business Owners, and Expats. At Sunshadow Investments, we provide our clients with everything they need to start setting up their business and expat tax here. We’ll take care of everything behind the scenes while you sit back and feel confident in us handling your case.