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Cyprus Tax

(a)Permanent Residents

An individual who spends at least 183 days in Cyprus in the tax year will be considered to be a Cyprus resident for tax purposes. These are people who: A series of incentives is given by the Cyprus Government to these people, including very low taxation of their income which emanates from abroad.

Individuals are taxed in Cyprus on the Following Types of Income

Income Tax Rates Applicable From 2004Rate
Up to: CYP 10,000Nil
From: CYP 10,001 - 15,00020%
From: CYP 15,001 - 20,00025%
Above: CYP 20,00030%

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Deductions and Allowances

The following can be deducted in calculating the tax liability:

Expatriate Tax and Social Security Contributions

Expatriate employees are taxed as follows:

Contributions are Currently Payable by Both Employer and Employees, at the Rate of 6.3%

Individuals are not taxed in Cyprus on interest or dividends received from sources either within Cyprus or from abroad, except for Defence Fund Contribution as explained below.

Defence Fund Contributions are Payable in the Following Cases

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Gains from Disposal of Securities

Any gains made from the disposal of securities are not subject to taxation in Cyprus. The exemption applies for all gains, including those that arise from trading in securities.

Double Tax Treaty

It is the policy of the Cyprus Government to encourage tax incentives for foreigners in order to develop Cyprus as a financial centre in its area, without proclaiming or promoting itself as a tax haven. Individuals or companies who choose to reside in Cyprus may also enjoy, under certain circumstances, the benefits of the Double Taxation Treaty of their country of origin with Cyprus, if there is one in place. The main objective of the Double Tax Treaty is to avoid the double taxation of income earned in any of the two contracting countries.

Cyprus has signed 32 such treaties, in effect regulating tax regulations with over 40 countries. For example, United Kingdom citizens may take advantage of the Double Taxation Treaty between the U.K. and Cyprus. This enables you to receive your pensions and investment income in Cyprus free of U.K. withholding tax. This Treaty is unique to Cyprus, since it includes both public and private sector pensions.

Insurance pensions can be paid to retirees in Cyprus on a similar tax-free basis, and are index-linked by virtue of the Reciprocal Agreement, compared to their "frozen" status in other overseas destinations.

(b) Non Residents

These are people who:

Individuals are Taxed in Cyprus on the Following Types of Income

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