Taxation in Cyprus is based on tax residency i.e. spending 183 days in the country in a tax year, not citizenship. Therefore, by obtaining the Cyprus passport no tax consequences are expected.
What are the potential tax consequences of citizenship through the program in Cyprus?
I am a successful businessman in Shanghai. I am interested in the Citizenship by Investor program in Cyprus because I would like to more freely travel through Europe, both for business and pleasure. However, I own two companies and have made many other investments. I am afraid that if I participate in the program I might be opening myself up to significant taxation. What tax consequences might I face? Are there steps I can take to limit the tax consequences?
The Cyprus tax regime is very attractive for professionals and for enterprises operating all around the world. The advantages and deductions offered by the regime makes it one of the most attractive and competitive in the world. A big advantage of Cyprus is the fact that is an EU member operating under a secure legal framework and protecting entrepreneurship while promoting organic growth. The island’s advantageous tax rate is coupled with an extensive list of double-tax treaties. Another big advantage is that the corporate tax on dividends is only 12.5 percent. The new tax measures that have been introduced to attract foreign investors are: notional interest deduction; non-domicile principle for defense tax purposes; a tax exemption period of high earners has been extended; profits from the sale of property will be exempt from taxation; a reduction in transfer fees. By participating in the program of Cyprus, you will not face significant taxation but a number of benefits.