CYPRUS Law and Practice Contributed by: Alexis Erotocritou, Dafni Loizou and Georgia Demou, A.G. Erotocritou LLC
are available on disposals of real estate situated in Cyprus. Favourable Tax Regime on Crypto-Assets Gains arising from the sale of a crypto-asset, the gift of a crypto-asset, the exchange of a crypto-asset with another crypto-asset and the use of a crypto-asset as means for making payments are subject to income tax at a flat rate of 8%. This special mode of taxation does not apply for gains on crypto-assets that were acquired through mining. Income Tax Exemptions for Taking Up Employment in Cyprus An expatriate individual relocating to Cyprus (irrespec - tive of their tax residency or domicile status) is eligi - ble to one of the following income tax exemptions on employment income. • A 50% exemption from the remuneration from the employee’s first employment in Cyprus available to employees who were not residents of Cyprus for a period of at least 15 consecutive years immediately before the commencement of their employment in Cyprus. The exemption applies for a period of 17 years, start - ing from the first year of employment in Cyprus, pro - vided that their remuneration exceeds EUR55,000. • A 20% exemption from the remuneration from the employee’s first employment in Cyprus available to employees (up to a maximum exemption of EUR8,550 per annum), provided that the employ - ees, immediately before the commencement of their employment in Cyprus, were employed out - side of Cyprus by a non-Cyprus resident employer for at least three consecutive tax years. The exemption applies for a period of seven years, and is first granted in the tax year following the tax year in which the employment commenced in Cyprus. • Income Tax Exemption for Overseas Employment The rendering of salaried services outside Cyprus to a non-Cyprus tax resident employer, or to an over -
seas permanent establishment of a Cyprus tax resi - dent employer, for more than 90 days in a tax year, is exempt from income tax. Share-Based Payments to Employees Benefits derived from employees and/or directors of a company in the form of share option rights or rights for acquisition of shares are subject to a flat tax rate of 8% (subject to conditions). Variable Remuneration of Individuals Employed in the Funds Industry (Subject to Conditions) The variable remuneration of employees of (i) an Alter - native Investment Fund (AIF) Manager or self-man - aged AIF; or (ii) a Management Company for Collective Investments in Transferable Securities (UCITS), which is connected to the carried interest, is taxed at a flat rate of 8% with a minimum tax liability of EUR10,000 per annum (subject to conditions). Qualifying employ - ees can elect to be taxed under this special mode of taxation on an annual basis for a ten-year period or otherwise be taxed in accordance with the personal income tax rates. 1.3 Income Tax Planning Cyprus, combined with its high quality of life, strategic location, modern infrastructure, and business-friendly environment, is considered one of the most attractive destinations for international professionals and inves - tors seeking both tax efficiency and substance within an EU jurisdiction. It offers useful income tax plan - ning opportunities, mainly through the tax exemptions and other benefits that are provided in the Cyprus Tax Laws (see 1.2 Exemptions ). More specifically, the Cyprus Non-Domicile (“Non- Dom”) regime is one of the most attractive personal tax incentives available within the EU, designed to attract international entrepreneurs, executives, inves - tors, and high net worth individuals to Cyprus. Individuals who become Cyprus tax residents but are not considered domiciled in Cyprus for tax purposes may benefit from significant exemptions on passive income for a period of up to 17 years. In particular, non-dom individuals are exempt from the SDC tax on dividend and -interest income.
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