How to achieve Zero income tax

Zero income tax means that less money is coming out of your paycheck each month, and when tax season c0mes around, you only have to submit a federal return.

The 183-day rule

Someone who spends more tan 183 days in Cyprus in a year will be considered a Cyprus Tax Resident. The days that are spent in and out of the Republic of Cyprus are calculated as the following:

1. The day that they leave Cyprus is considered as a day out of the republic.
2. The day they arrive is considered as a day within the Republic of Cyprus.
3. If they arrive and depart in the Republic of Cyprus, it counts as one day within the Republic.
4. If someone departs and arrives in the Republic of Cyprus counts as one day out of the Republic.
5. Foreign taxes that have been paid can be credited against the Income Tax liability.

The 60-day rule

As of January 1st, 2017, someone may be considered a tax-resident. This applies when;

1. Don’t reside in any other states for 183 days
2. Aren’t considered a tax resident by any other state.
3. Reside in Cyprus for atleast 60 days.
4. Have other ties to Cyprus. This condition must apply when the person carries out business activity in Cyprus. They must either be employed in Cyprus or hold an office for a company tax resident. The person must also have a permanent residential property in the Republic of Cyprus, either rent or ownership.

There are various types of direct taxes that are applicable to someone residing in the Republic of Cyprus;

1. Income tax
2. Special defense contribution on dividend, interest and income from rentals.
3. Capital gains from the selling real estate in the Republic.