Digital Nomad Visa in Cyprus

Who Is a Digital Nomad?

A digital nomad is someone who uses technology and the internet to work remotely from anywhere in the world. This includes a broad range of professionals: freelancers, entrepreneurs, employees of companies that allow remote work, software developers, designers, marketing professionals, and content creators. What they all have in common is the ability to deliver high-quality work without being tied to a specific geographic location.

In recent years, especially since the COVID-19 period, the number of digital nomads worldwide has grown dramatically. Many countries, with Cyprus among the leading ones, have begun offering legal and tax frameworks tailored to this population.

Digital Nomad Visa in Cyprus

In January 2022, Cyprus was among the first countries in Europe to launch a dedicated visa program for digital nomads, also known among Israeli self-employed individuals as a freelancer visa. The visa is intended for non-European Union citizens who wish to work as self-employed individuals or freelancers in Cyprus for employers or clients located outside Cyprus.

Main Conditions for Obtaining a Digital Nomad Visa in Cyprus

*Important to know: Close family members of the digital nomad may also be included in the visa application, but they are not permitted to work for Cypriot entities or seek local employment during the visa period.

There Are Two Routes to Cyprus Tax Residency for Israelis

• The 183-day route – the classic rule: Staying in Cyprus for 183 days or more in a calendar year establishes Cypriot tax residency and allows access to the full range of tax benefits detailed in this article.

• The 60-day route – an attractive alternative: Cyprus also offers an alternative route for establishing tax residency within only 60 days, provided that several cumulative conditions are met: staying in Cyprus for at least 60 days, staying for fewer than 183 days in any other country and having no active tax residency in another country, conducting business activity in Cyprus, and having a permanent residence in Cyprus, whether owned or rented.

Tax Benefits in Cyprus

50% Income Tax Exemption

An individual who relocates to work in Cyprus is entitled to a 50% income tax exemption on annual salary exceeding 55,000 EUR, for a period of up to 17 years. The threshold conditions are that the individual was not a Cyprus resident in the 10 years preceding the employment, and that the employment began after January 2022.

Non-Dom Status – Exemption on Income from Outside Cyprus

A person who benefits from non-domiciled status in Cyprus, meaning someone who was not a Cypriot tax resident in 17 out of the 20 years preceding the tax year, is entitled to a full tax exemption on dividends, interest, and gains arising from sources outside Cyprus. This is a particularly significant advantage for holders of financial investments, shareholders, and anyone receiving passive income from abroad.

Low Corporate Tax Rate

The corporate tax rate in Cyprus is only 12.5%, one of the lowest in the European Union. It is a key consideration for digital nomads who conduct business activity through a company.

Why Cyprus? Additional Advantages

There are currently quite a few options for digital nomads when considering where to settle. However, when comparing Cyprus with Portugal or Spain, for example, the Cypriot advantages stand out in particular:

• Excellent Mediterranean climate – an average of 300 days of sunshine per year and an average annual temperature of 25 degrees
• European Union membership – legal stability, access to the European market, and regulatory certainty
• English language – most Cypriots speak English at a high level, which makes doing business easier
• Relatively low cost of living – high quality of life at a lower cost compared with Western European countries
• Active digital nomad community – a vibrant networking community of entrepreneurs and self-employed professionals from around the world, which makes integration easier and opens opportunities for collaborations
• Simple and fast company formation – the registration process takes approximately 10 days, at a cost of up to EUR 2,500

What Is Important to Know Before Relocating to Cyprus?

Based on our professional experience, many Israelis move to Cyprus without properly planning the tax aspects, which may result in double tax liability: both in Israel and in Cyprus.

Severing Israeli tax residency is a necessary condition for most tax benefits, and it is a process that requires advance and professional planning. In addition, Israel and Cyprus are parties to a treaty for the prevention of double taxation, which is a key tool in tax planning for any Israeli considering relocation to Cyprus. The Israel-Cyprus Tax Treaty determines which country has the primary taxing right over each type of income, whether employment income, dividends, interest, capital gains, or income from real estate assets. In cases where both countries claim taxing rights, the treaty allows the tax paid abroad to be credited against the Israeli tax liability, thereby preventing double payment. Understanding the provisions of the treaty is essential for proper tax planning, and it is recommended to review it together with the question of severing Israeli tax residency before making any decision.

In Summary: Proper Tax Planning – The Key to Successful Digital Nomadism in Cyprus

Cyprus offers a real opportunity for digital nomads, but making full use of the benefits requires early professional planning.

Nimrod Yaron & Co. specializes in Israeli and international taxation. Our team is composed of professionals with years of experience at the Israel Tax Authority, alongside experience at leading firms and law offices, bringing together a legal and economic perspective. Our team of experts specializes in severing tax residency and advising Israelis planning relocation to Cyprus and other countries. We would be happy to help you build the right tax structure, use the existing benefits lawfully, and avoid tax pitfalls that may prove costly.

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