Brazilians around the world: Cyprus
Legalmondo e Internacionalize
The Internationalize portal, alongside Legalmondo, launches the Brazilians around the world series, which will address the main legal aspects of each country, analyzed from the points of view: immigration, tax, succession and business. This edition covers Cyprus.
Browse through the questionnaire items in the menu below:
1. The main work visas in Cyprus
2. Investment-related visas in Cyprus
3. Special types of visa in Cyprus
4. How to obtain citizenship in Cyprus
1. Individual Income Tax in Cyprus
3. How Cyprus views Tax Havens
4. Treaties to avoid double taxation in Cyprus
2. Trusts and Foundations under Cyprus' Law
1. Setting up and running a business entity in Cyprus
3. Opening a bank account in Cyprus
Immigration Law
1. The main work visas in Cyprus
No work visa is required by a European Union national who can enter and work in Cyprus. An entry, residence or employment (work) permit is required in the case of nationals of other countries. There are different kinds of residence permits: temporary residence permit, immigration permit, long term residence permits; not all of them grant a right to the holder to work in Cyprus.
Generally, work related permits will be issued for a maximum period of 4 years, apart from work in the sectors of the livestock farming and agriculture sectors, in which case the maximum period is 6 years. Extended visas may be granted in the cases of:
(i) highly skilled personnel employed in companies with substantial annual turnover;
(ii) executive directors, middle-management staff, executive staff and other key personnel working in companies of foreign interests (at least 50% of the company’s share capital belonging to a non-Cyprus citizen or, its’ direct foreign capital investment to be at least €171.000); certain minimum salary requirements apply;
(iii) qualified nurses, registered in Cyprus for the practice of such nurse profession;
(iv) athletes and coaches of individual or team sports;
(v) religious icon painters (for particular projects).
Different rules apply for other categories of people who may obtain a temporary residence permit e.g. students, researchers, domestic workers, employees in start-ups etc.
2. Investment-related visas in Cyprus
At the time of drafting this report, no investment-related visa scheme is in force.
3. Special types of visa in Cyprus
European Union nationals and their family members must complete a registration procedure within four months from the date of entry into the Republic of Cyprus if they will live and work in the country. Such persons and their family members may apply for the issue of a permanent residence certificate after a period of 5 years of uninterrupted lawful residence in the Republic of Cyprus.
4. How to obtain a Cyprus citizenship
Different rules apply depending on one’s circumstances:
Foreign nationals: Completion of 7 years of lawful residence in the Republic of Cyprus prior to the date of application with the exception of foreign nationals who are either parents or children of Cypriot citizens in which case the period of residence is reduced to 5 years. Such person must have resided lawfully and continuously in Cyprus during the period of 12 months preceding the date of the application.
Spouses of Cypriot citizens: Foreign nationals married to Cypriot citizens who have completed 3 years of marriage and 2 years of residence in the Republic of Cyprus preceding the date of the application.
Cypriot origin: individuals born abroad after the 16th of August 1960 whose father at the time of birth was a Cypriot citizen and individuals born abroad after the 11th of June 1999 whose mother was a Cypriot citizen at the time of their birth may apply for Cypriot citizenship.
Tax Law
1. Individual Income Tax in Cyprus
Cyprus taxes tax residents on their worldwide income and non-tax residents are taxed on income accruing or arising from sources in Cyprus. An individual is considered as tax-resident in the Republic of Cyprus if he stays in Cyprus for more than 183 days in a year.
An individual who does not stay in any other country, for one or more periods exceeding in aggregate 183 days in the same tax year and is not tax resident in any other country for the same year, is deemed as a resident in Cyprus in that tax year, if all of the following conditions are met:
the individual stays in Cyprus for at least 60 days in the tax year,
exercises a business and/or is employed in Cyprus and/or holds an office with a Cyprus tax resident company at any time during the tax year,
maintains (by owning or leasing) a permanent home in Cyprus.
The income tax rates applicable to personal income are as follows:
Taxable income Tax rate
0 - 19,500 0
19,501 – 28,000 20%
28,001 – 36,300 25%
36,301 – 60,000 30%
60,001 and over 35%
Tax paid in respect of any income in another country with which Cyprus has entered into a double tax avoidance treaty is to be allowed as a credit against tax payable in Cyprus in respect of that income. The amount of tax payable in respect of the income is reduced by the amount of the credit.
2. Wealth Taxation in Cyprus
Cyprus generally does not impose a wealth, gift, or inheritance tax.
Capital gains tax is imposed on transfers of immovable property located in Cyprus as well as on shares of companies holding immovable property in Cyprus. Certain transfers are exempted from the applicable capital gains tax. These are as follows:
transfer by reason of death,
gift made from parent to child or between husband and wife or relatives within the third degree of kindred,
gift made to a limited liability company whose shareholders are and continue to be members of the disposer’s family for a period of 5 year as after the gift,
gift of property made by a limited company, where all the shareholders are members of the same family, to any of its shareholders property when the property which is gifted was acquired by the company also as a gift,
transfer of immovable property between estranged spouses after the issue of a divorce court order which constitutes a settlement of property between them under that relevant laws.
Gifts of movable assets are not subject capital gains taxation in Cyprus.
3. How Cyprus views Tax Havens
At the date of writing this report Cyprus does not maintain a blacklist. However, a draft law is under examination aiming to introduce withholding tax on dividend, interest and royalty payments to countries included in Annex I of the EU list of non-cooperative jurisdictions on tax matters at the rates of 17%, 30% and 10% respectively. In addition, a further corporate tax residency element based on incorporation is proposed to be added to the existing ‘management and control’ test.
4. Treaties to avoid double taxation in Cyprus
Cyprus is not a member of the OECD. The double tax avoidance treaties entered into by Cyprus usually follows the OECD model treaty with certain changes. Yet not all such treaties provide for a limitation of benefits provision. At this date, 63 double tax avoidance treaties with other countries are in force.
Succession Law
1. Probate in Cyprus
Under Cyprus law, succession is not automatic; appropriate procedures need to be followed before the courts for the appointment of a personal representative i.e., execution if there is a will or the grant of probate if there is no will (executor or administrator). The personal representative(s) must then establish title and gather the assets of the deceased, must pay any applicable taxes and distribute the estate to the heirs.
Cyprus is a member of the European Union (EU), therefore the Succession Regulation (EU/650/2012), known as Brussels IV Regulation, applies with regard to cross-border succession. Subject to Brussels IV Regulation (see below), succession of immovable property located in Cyprus shall be governed by Cyprus law being lex rei sitae and therefore forced heirship imposed by Cyprus law shall apply regardless of the domicile of the deceased at the time of death. Cyprus law shall recognize the applicability of the law of domicile of the deceased at the time of death with regard to the disposal of movable property.
Consequently, subject to Brussels IV Regulation, where the deceased is domiciled in Cyprus, Cyprus law applies to succession to the estate and the probate procedures relate to the estate of the deceased whether located in Cyprus or abroad and where the deceased is not domiciled in Cyprus, Cyprus law applies to the succession of immovable property located in Cyprus.
2. Trusts and Foundations under the Cyprus Law
Having a common law tradition, Cyprus law does recognize trusts. Registration of the existence of a trust is mandatory, although information with regard to the identity of the settlor, the beneficiaries and other parties involved is not disclosed. Trust registers maintained by the competent authorities are not public available or accessible but, upon certain conditions being met, they may be inspected by the other competent authorities.
Foundations may be established under Cyprus law. However, they need to have a charitable cause. Therefore, they are not considered nor are they used to further private objectives.
3. Other relevant aspects
Brussels IV Regulation is applicable in Cyprus. Brussels IV Regulation refers focuses on the concepts of “habitual residence” and “nationality” as possible choices for the law governing succession. On the other hand, Cyprus law adopts the concept of “domicile”; a broad and rather vague concept associated with the place the deceased person considered as his permanent residence and where he had intended to spend the rest of this life. Yet “domicile” must be established because the provisions of the relevant statute regulate the succession to the estate of all persons domiciled in Cyprus and the succession to the immoveable property (situated in Cyprus) of all persons not domiciled in Cyprus.
It is noteworthy that Cyprus law adopts a “forced heirship” regime thus persons domiciled in Cyprus do not have absolute testamentary freedom in relation to their estate after death. A certain portion of the estate is by law disposed to the closest relatives the deceased who are alive at the time of the deceased’s death (the percentage depends on the degree of relationship with the closest relatives), while the rest of the estate the testator may be disposed by will.
Business Law
1. Setting up and running a business entity in Cyprus
Setting up a business entity is not difficult and it may be completed in relatively short time. The actual initiation of operations would on the actual business it will engage into and possible preconditions that need to be complied with e.g., if the business is a regulated activity the appropriate authorizations and or licenses will need to be obtained.
One may choose between the following vehicles depending on their characteristics and what they serve the needs of such person:
(i) Limited liability company: separate legal personality, limited liability of members, no minimum capital requirements, no minimum number of members.
(ii) Public liability company: separate legal personality, limited liability of members, minimum capital requirements (at least 25 629 euros), at least 7 members.
(iii)General partnership: no separate legal personality, unlimited liability for all partners, at least 2 partners.
(iv) Limited partnership: no separate legal personality, unlimited liability for the general partners and limited liability for limited partners, at least 2 partners.
2. Entity holders in Cyprus
The limited liability company is the only vehicle that available where it is intended that there will be single shareholder. Due to legal requirements the other vehicles cannot be used for this purpose. Partnerships must have more than one partner and public companies must have at least 7 members.
There is no restriction as to the nationality or the residence of a shareholder and there are no legal requirements as to the nationality or residence of the officers of the company. However, the residency of the officers would, among others, be a factor relevant in the determination of the tax residency of the company. Where it is intended that the company will be tax resident in Cyprus, it is common that the majority of the persons appointed as directors are actually tax residents in Cyprus.
3. Opening a bank account in Cyprus
Opening of bank accounts with credit institutions in Cyprus has become a rather bureaucratic and timely process both in the case of a newly established Cyprus company and a foreign company due to the anti-money laundering and know-your-client requirements applied by the credit institutions.
Prepared by Christi Kythreotou.
Christi Kythreotou is an advocate licensed to practice law in Cyprus who specializes in corporate and financial law. She is a partner at Georghios Colocassides & Partners LLC. Christi can be reached at ck@cohalaw.com.