Tax Breaks for Expats and Digital Nomads in Cyprus

• Expatriates: In Cyprus, individuals are considered expatriates if they are non-residents for tax purposes but work for a Cyprus-based employer or conduct business activities in Cyprus for a temporary period.
• Digital Nomads: Cyprus does not have specific tax breaks tailored explicitly for digital nomads. However, individuals working remotely from Cyprus for foreign employers may qualify for certain tax benefits available to non-residents.

Types of Tax Breaks:

• Tax Exemptions: Non-resident expatriates may be eligible for exemptions on foreign-sourced income, including salaries earned outside Cyprus while working for a Cyprus-based employer.
• Reduced Rates: Cyprus offers competitive personal income tax rates for non-residents, with rates ranging from 0% to 35% on taxable income, depending on the total income and residency status.
• Double Taxation Treaties: Cyprus has an extensive network of double taxation treaties (DTTs) with over 60 countries, providing relief from double taxation for expatriates and digital nomads.

Application Process:

• Expatriates: To benefit from tax exemptions or reduced rates, expatriates must apply for non-resident status with the Cyprus tax authorities. Documentation such as employment contracts, residency permits, and proof of foreign-sourced income may be required.
• Digital Nomads: Digital nomads working remotely from Cyprus may need to provide evidence of their employment status, residency, and source of income to claim any applicable tax benefits.

Legal References:

• Income Tax Law (Law 118(I)/2002) and subsequent amendments govern the taxation of non-residents and the eligibility criteria for tax breaks.
• Double Taxation Treaties signed by Cyprus provide the legal framework for relieving double taxation and may include specific provisions benefiting expatriates and digital nomads.
• The government's policy objective behind offering tax incentives to expatriates and digital nomads is to attract skilled professionals, encourage foreign investment, and support economic growth.

While Cyprus offers attractive tax incentives for expatriates, including tax exemptions and competitive tax rates, it does not have specific provisions targeting digital nomads. However, remote workers may still benefit from favorable tax treatment as non-residents. It's advisable for individuals considering relocating to Cyprus for work to consult with tax advisors and explore their eligibility for tax benefits based on their specific circumstances.