Cyprus tax residency

Cyprus, a relaxed Mediterranean country with comparably low cost of living and a favorable tax environment is among the most popular destinations for foreign business owners to set up their residencies.

Cyprus is a member of the European Union, therefore, the process of becoming a resident of Cyprus is different for EU and non-EU citizens.

Process of becoming a resident of Cyprus for an EU citizen is relatively easy.

A person has either to prove his occupation/business activities in Cyprus or to provide authorities that he / she has enough funds to live in Cyprus (not less than 10 000 EUR per year) and submit a local rent agreement. A person is not required to spend time in Cyprus in order to maintain their residency status.

It is required to visit Cyprus in order to finalize all migration procedures, however, with Nomad Law’s Cyprus residency solution, all paperwork is prepared before the client arrives, therefore, the visit can take no longer than few days. Nomad Law assists the client during the meeting with the migration authorities and, after that, takes care of obtaining a Tax Identification Number (TIN).

Becoming a resident in Cyprus and having a TIN, however, does not automatically mean that the person is also a tax resident. Read more about the difference between a resident and a tax resident here .

Cypriot authorities will not challenge the tax residency themselves, but it might be questioned by other jurisdictions, especially by the country of citizenship or those in which the person was residing for tax purposes before. For example, a high-tax country, with which an individual has some connection, might start a personal tax investigation in order to determine whether this person should be paying taxes in it.

In such case, a in addition to basic residency documents, like residency permit, TIN, rental agreements and utility bills, foreign tax authorities might ask to submit a Tax Residency Certificate (TRC) from Cyprus.

TRC could also be required for withholding tax reduction if a company in, for example, Lithuania, would wish to pay dividends to a resident of Cyprus. Treaty for avoidance of double taxation between Lithuania and Cyprus would determine that dividends, paid by the Lithuanian company, are subject to reduced withholding tax rate in Lithuania, therefore, Lithuanian authorities might ask to present the TRC in order to prove that the person is not only residing in Cyprus, but is a tax resident there as well.

Contact us and we will gladly answer any questions you might have, as well as help you to obtain the tax resident status in Cyprus (or other jurisdiction if, after evaluating your individual circumstances, we will discover that a different option would suit your case better).