Once you have obtained a Residence permit here in Cyprus, you should register at the local income tax office as a Cyprus taxpayer. Anyone who lives in Cyprus for more than 183 days in the financial year is required to pay tax on any income generated in Cyprus or from overseas.
There are two separate tax schemes, one for employed people and the other for retirees. The progressive tax rates for working taxpayers are between 0% (for income of up to CYGBP10,000) and 30% (for income of CYGBP20,000 or more). Retired people benefit from very favourable tax rates, with a maximum of 5% on any income of CYGBP2,000 or more. In order to qualify for this, however, retired people are not allowed to undertake any paid employment.
Cyprus has double taxation agreements with many countries, including the UK.
No income tax is payable in Cyprus on other sources of income, including bank interest and dividends from shares, although they do incur a Cyprus Defence Levy tax of between 10% and 15% depending on the type of income. Capital Gains Tax of 20% is payable on the sale of immovable property in Cyprus. No capital gains tax is payable on gains from investments. There is no longer any inheritance tax payable in Cyprus. VAT at a rate of 10% used to be included in the price of all goods and services, except for certain items such as food, medicines and children's clothes and shoes. However, the VAT rate rose to 15% on many items when Cyprus joined the EU.