Relocation to Cyprus requires separate assessment of tax residency, immigration status, right to work, employment, remuneration, payroll and corporate substance.
Tax residency tests
Cyprus applies two tax-residency tests.
183-day rule: an individual is a Cyprus tax resident if they spend more than 183 days in Cyprus during the tax year. The day of arrival is generally counted as a day in Cyprus; the day of departure as a day outside Cyprus.
60-day rule: an individual must:
· spend at least 60 days in Cyprus;
· spend no more than 183 days in any other country;
· carry on business or employment in Cyprus or hold an office in a Cyprus tax-resident company; and
· maintain a permanent residence in Cyprus, owned or rented.
If the relevant business or employment in Cyprus ends during the tax year, the individual may cease to qualify under the 60-day rule. From 2026, Cyprus no longer requires an individual to be non-resident for tax purposes elsewhere to qualify under the 60-day rule. This does not prevent dual tax residence. Where it arises, the applicable double tax treaty and residence tie-breaker rules must be considered. The assessment should also cover employment, business activity and permanent residence.
Tax and immigration residence
Tax residency and immigration residence are separate. A residence permit does not itself create Cyprus tax residence, while tax residence does not require a particular permanent immigration status.
A relocation should therefore address:
· tax residence;
· immigration category;
· right to work;
· employing entity;
· remuneration and payment arrangements;
· payroll and social insurance;
· potential corporate tax and substance implications.
Non-domicile status
A Cyprus tax resident may be non-domiciled for Special Defence Contribution (SDC) purposes. An individual is generally deemed domiciled in Cyprus after at least 17 of the previous 20 years as a Cyprus tax resident.
Non-domiciled residents are generally exempt from SDC on dividends and interest. SDC on rental income was abolished from 2026, although income tax may still apply. Domiciled residents are subject to 5% SDC on dividends from profits earned from 2026. Non-domicile status is not automatic and must be claimed and evidenced.
Personal income tax
Cyprus tax residents are taxed on worldwide income at the following 2026 rates:
Taxable income Rate
€0–€22,000 0%
€22,001–€32,000 20%
€32,001–€42,000 25%
€42,001–€72,000 30%
Above €72,000 35%
The tax-free threshold increased from €19,500 to €22,000 in 2026.
Qualifying newcomers starting their first job in Cyprus may receive:
· 50% exemption for 17 years if annual income exceeds €55,000;
· 20% exemption, capped at €8,550, for other qualifying new arrivals;
· 25% “brain gain” exemption, capped at €25,000, for qualifying individuals earning over €30,000 and starting work between 2025 and 2030.
Eligibility depends on employment history, income and statutory conditions.
Residence and work permits
EU/EEA nationals generally do not require a third-country work permit. For third-country nationals, the right to work depends on the relevant immigration and employment category.
A key route for highly skilled third-country nationals is employment by a Company of Foreign Interests registered with the Business Support Center (BSC). Eligibility may arise through:
· more than 50% foreign ownership;
· certain minority foreign participation; or
· qualifying innovation/R&D status.
An eligible company generally must demonstrate an initial investment of at least €200,000. The investment may be evidenced by a qualifying deposit in a Cyprus corporate bank account, acquisition of office premises or business equipment, subject to applicable timing and documentary requirements.
BSC registration may require:
· corporate and constitutional documents;
· ownership and UBO information;
· evidence of the qualifying investment;
· premises documentation;
· audited financial statements for existing companies; and
· other required documents.
The company must also meet applicable tax, social insurance and employment registration requirements.
Highly paid third-country employees
A Company of Foreign Interests may employ highly paid third-country nationals who:
· receive at least €2,500 gross per month;
· have relevant academic qualifications or at least two years’ relevant experience; and
· have an employment contract of at least two years.
The €2,500 immigration/employment threshold is separate from the €55,000 threshold for the 50% personal income tax exemption.
Family members
Depending on the immigration category, spouses and children may qualify for residence permits and, in some cases, access to the Cyprus labour market. Their status should be assessed together with the main applicant's immigration route.
Structuring the relocation
Companies relocating owners, executives or staff should align corporate substance, payroll registration and residency timing before arrival, since day-counting, employment continuity and permit category directly affect the applicable tax outcome.
In practice, the most efficient relocation structures are not built around a single tax incentive or immigration route. They are designed by considering the individual's residence, employment, income and business activities together, so that the structure remains workable from both a tax and regulatory perspective.
The key is to ensure that the structure reflects the individual's actual personal and economic circumstances and is supported by appropriate documentation.
By Iryna Voievodina, partner at Interlegal, head of corporate practice
Kateryna Havryliuk, lawyer at Interlegal
