Non – domiciled persons not liable to defence tax
Defence tax is payable only by persons who are considered to be tax residents of Cyprus which effectively means an individual who spends at least 184 days in Cyprus every tax year. Defence tax is payable on dividends, interest and rental income. The law was amended so that individuals who are not considered to be “domiciled” in Cyprus would be exempt from payment of defence tax on dividends, interest and rents, even if they are considered as tax residents of Cyprus. In the law there are clear provisions on who is considered as non – domiciled in Cyprus for defence tax purposes.
Extending the available exemptions of personal income tax for those taking up residency in Cyprus
Under current law 50% of the income from employment in Cyprus of a person who was not a tax resident of Cyprus before the beginning of his employment, is exempt from taxation for a period of five years, provided the income from employment in Cyprus exceeds €100.000 per annum. The period of five years is now extended to ten years.
Capital Gains Tax relief
In an effort to boost the suffering construction business the Government has introduced some tax incentives in relation to immovable property. Specifically for Capital Gains Tax, the new law provides that there will be no Capital Gains Tax on the future sale of an immovable property situated in Cyprus that will be acquired until 31st of December 2016. In addition, except in some specific circumstances, the land transfer fees are reduced by 50% for the transfers that are taking place up until 31st December 2016.