The taxation framework applicable to one of the most popular investment immigration programs in the world, the Cyprus Citizenship-by-Investment Program, has been modified to enhance its attractiveness to non-domiciled investors.
The President of Cyprus recently announced changes to the tax framework applicable to the program that will allow investors to enjoy tax-free profits on their investments in the country until the end of 2016. Currently, Cyprus is the only country in Europe to offer such a benefit to non-domiciled investors.
The modification to the tax rules serves as additional incentive for investors to select the country’s citizenship-by-investment program. The Cypriot program outscores programs offered by other countries in various important parameters like reputation, Quality of life for applicants, visa-free travel facilities, average processing time, compliance requirements, minimum investment requirements, additional residence conditions, overall ease of relocation, number of physical visits required, and overall level of transparency in the administration of the program.
With quality infrastructure and easy access to educational, healthcare, and social facilities, residents of Cyprus enjoy a very high standard of living as compared to residents of other countries in the region. The holder of a Cypriot passport is entitled to unrestricted travel to 28 EU nations and visa-free entry into other developed countries.
The program has witnessed steady growth in investor interest from all over the world. Demand from the Middle East and North Africa region has virtually doubled in the first six months of 2015. The changes to the tax framework are expected to further bolster Cyprus’ reputation as a center for business and financial services.
The recent tax-law change has introduced a new category of tax payers called the non-domicile individual, which has been designed to cater primarily to high-net worth individuals. Investors falling under this category will enjoy the following additional benefits:
- Exemption from the Special Defense Contribution Tax, which is charged at 30% on interest income and 17% on dividend income.
- A 50% cut on transfer charges levied on real-estate transactions until the end of 2016.
- Exemption from tax on capital gains arising out of real estate transactions with prospective effect till 31 December, 2016.
- Rationalization of property tax, transfer fees, and notional interest deduction applicable on infusion of fresh capital into companies in Cyprus.
The combination of a liberal investment immigration program and a relaxed tax regime is likely to result in a significant increase in demand from high-net worth individuals, investors, and entrepreneurs from all over the world.
The tax law changes are a part of comprehensive reforms being contemplated by the Cypriot government. Other proposals that are expected to be considered by the authorities in the coming months include a tax-neutral regime on forex differences arising out of non-trading transactions, inclusion of arm’s length downward adjustment to the existing principle, and doubling of the tax exemption available to expatriates with income in excess of EUR 100,000 from five to ten years.
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Source: Zawya.com