Cyprus Tax: Essential Updates and Benefits for Residents and Expats
Subscribe to our newsletter for the latest expatriate news, views & analysis. No spam, unsubscribe anytime.
In this article we're diving into the intricacies of the Cyprus tax system, focusing on the recent updates and how they impact both residents and non-residents.
Tax Return Submission in Cyprus
Every year, Cyprus tax returns are due for the previous year by 31 July, with submissions opening in February or March. This year, as in previous years, there have been delays due to updates in the online submission system which means the deadline is now 31 October.
Despite the deadline extension, it is still important crucial to submit your tax return as soon as possible with the August deadline for balancing tax payments.
Who Needs to Submit a Tax Return?
Significant changes have been made regarding who needs to file a tax return in Cyprus. All taxable entities, including businesses, trusts, property owners, and individuals, must now complete a tax return. Previously, individuals without specific types of income might have been exempt, but this is no longer the case. Notably, income from property rentals, business activities, or gains from the sale of Cyprus real estate must be reported.
Read more about who needs to submit a tax return in Cyprus
Residency and Tax Obligations
To be a tax resident in Cyprus, individuals must spend at least 183 days in the country within a tax year. Those wishing to avoid tax obligations in their home country, such as UK expats or digital nomads, can take advantage of Cyprus' 60-day rule. This rule allows individuals to be considered tax residents if they have a permanent residence in Cyprus and spend at least 60 days in the country while not being tax resident in any other country.
Read more about tax residency in Cyprus
Health Tax Introduction
A new flat-rate health tax of 2.65% on worldwide income has been introduced. This tax is mandatory for all Cyprus tax residents, irrespective of their other tax obligations. Even those enjoying tax benefits like 0% tax on dividends and interest or 5% on pensions will need to pay this health tax. For those working in Cyprus with social insurance, the health tax is included in their contributions.
Permanent Residency and Health Care
Permanent residents and citizens of Cyprus are entitled to state health care. However, recent changes require retirees to register their state pension health care rights from their home country to Cyprus using an S1 or A1 form to continue receiving health care benefits. This bureaucratic process is essential to ensure that health care costs are covered by the individual's home country.
Summary
Navigating the Cyprus tax system can be complex, but understanding these key points can help you stay compliant and make the most of the benefits available. For more information and assistance with tax returns, residency permits, and more, visit ProactPartnership.com. Stay informed and ensure you meet all your tax obligations to enjoy a smooth and beneficial experience living and working in Cyprus.
For further assistance and detailed guidance on the Cyprus tax system, you can contact us.
Instruct ProACT to save tax.
Our expat experts have been minimising expatriates taxes for over 20 years. Learn more about instructing us to help you save tax & submit on time now.
