How and why to move to Cyprus: a detailed guide to relocation

Imagine you are at the airport. To get on the coveted London-Limassol flight, you have to go through all the necessary stages – check-in and passport control, baggage drop-off, duty free zone, and then relax with your family in the family zone, tuning in to the relaxed Cypriot rhythm of life. In a way, the process of preparing for the move is similar to this itinerary. Let’s go through it together – right in the course of this article.

1

Immigration check-in and passport control

The first place to start when planning a relocation to Cyprus is to ask yourself the question, “On what basis will I be able to live here?”.

This depends on your nationality and the residence permits (LPRs) you already hold. EU citizens have the easiest time: European passport holders are free to reside and work in Cyprus without restrictions. In other cases, a Cypriot residence permit will be required for long-term residence.

*Important: the program for obtaining Cypriot citizenship through investment is closed as of November 1, 2020.

Examples:

• If you have a Russian passport and a Spanish residence permit, you can enter Cyprus and stay for up to 90 days in any 180-day period. This is suitable for tourism, but not for long-term residence.
• The same 90-day rule applies to British passport holders.
• Holders of a Russian passport and a British residence permit will need not only a reason to stay in Cyprus, but also permission to enter the EU zone.

Which case you have can be seen in the table:

* Also applies to holders of third country residence permits, e.g. UAE.

It is possible to obtain a Cyprus residence permit on various grounds, such as:

• Employment in a Cypriot company.

• Investments from 300,000 euros in one of the following assets: residential real estate; commercial real estate (in this case you will need to additionally rent or purchase housing for living); shares in a Cypriot company with commercial activities and a minimum of 5 local employees; securities – units of Cypriot investment funds investing in assets in Cyprus (AIF, AIFLNP, RAIF).

Practical advice: when choosing the type of residence permit, it is worth considering both financial possibilities and personal plans, as well as family situation. For example, an investment residence permit allows permanent residence but does not entitle you to work in Cyprus. Under this type of residence permit you will need to prove an annual foreign income of 50,000 euros or more (the amount increases if you add family members to your application).

2

Tax Duty-Free

Tax residency in Cyprus deserves special attention. Due to the flexible conditions for obtaining it, it can be an effective tax planning tool.

How to become a tax resident of Cyprus:

• Unlike most EU countries (e.g. Italy, Spain or Portugal) where you need to spend at least 183 days per year for residency purposes – in Cyprus it is enough to live for 60 days, provided you can document it.

• However, you cannot spend more than 183 days per year in any other country.

• It is also important to demonstrate close economic and social ties with Cyprus (the very ties familiar to UK tax residents). Supporting factors may include: employment in Cyprus; owning or renting real estate; having accounts in Cypriot banks; investing in local assets (e.g. RAIF units); owning a car and other signs of a strong presence.

Advantages of tax residency in Cyprus:

• Dividends and interest income of a passive nature (if your main activity is not related to financial services) are not subject to income tax (Personal Income Tax, PIT) for all residents; Special Defense Contribution (SDC) for residents with non-domiciled status.

• The non-domiciled regime exempts from SDC for the first 17 out of 20 years of tax residency in Cyprus.

• Gains from the sale of securities are not subject to Capital Gains Tax.

Cyprus will be an effective choice for tax residency if:

• Your main income is of an investment nature. For example, dividends from private companies, coupon income, profits from the sale of personal investment portfolio assets.

• You or your relatives are planning to take up employment in Cyprus, in which case an exemption of 50% PIT on salary may be possible, provided the criteria are met.

Practical advice: in order to confirm your tax status in Cyprus, it is important to create a personal “Residency File” every year, which will help you in case of tax audits or disputes. It should include: boarding passes or other documents confirming the days of stay; Tax Residency Certificates; proof of non-domiciled status.

3

Family Zone and enrollment in a Cypriot school

So, having gone through the “adult” stages of relocation, it’s time to think about the children and choosing a school in Cyprus.

Highlights:

• Enrollment in schools is strongly in advance. It is better to apply at least 1-2 years in advance. Even if your child is only 3 years old now and you plan to enroll from the age of 6, you should decide on a school and get on the waiting list now.

• Consider 3-4 schools at once. In the past, 1-2 options were enough for a “tender”, but with the growing demand, it is better to consider several alternatives at once.

• The competition is growing, and under these conditions schools give priority to children with higher academic performance – those who pass the entrance tests (usually English, mathematics and basic logic tasks). Such tests for elementary grades (1st-3rd grade) are quite simple. For admission to middle and high school requires serious preparation – it is better to study with a tutor and study all the materials that the school will provide. Keep in mind that the level of the tests increases every year.

Which can increase the chances of admission:

• Good academic performance in the previous school, if it is an international or English school or an International Baccalaureate (IB) institution.

• Recommendations from parents of pupils who already attend the school of your choice. In Cypriot schools, such recommendations can play a role.

Conclusion: If you are planning to move to Cyprus with children, start preparing at least a year in advance. This will help with the application process, test preparation and choosing the right school.

Practical advice: if you have not had time to enroll or prepare for school in Limassol, you can consider Paphos or Larnaca as a temporary solution. The child can safely study there for one school year, and then – transfer to a school in Limassol. This option will require additional time and logistical costs (if your family will live in Limassol), but in some cases it may be the best solution.

***

A key rule of our time is to plan ahead. Especially when it comes to such an important step as family relocation. Cyprus offers many opportunities, and to make the move comfortable, it is important to think about everything in advance – from immigration status and tax residency to schooling for the children and household issues. Then, having successfully passed all the preparatory stages, you will be happy to hear: “Passengers traveling on flight 44020 to Limassol – please proceed to Gate 357”. And that will be the beginning of your new Cypriot life.

You can contact the experts at LEON Family Office Ltd. for more detailed consultation through their official Telegram channel or contact the company’s office at address: Noble Center, Spyrou Kyprianou Ave. 47, Office 201, Mesa Geitonia 4003, Limassol, Cyprus.