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Cyprus offers tax breaks to attract rich foreigners

Xinhua, July 3, 2015 Adjust font size:

Bailed out Cyprus is offering tax incentives to attract rich foreign nationals as a way of boosting the construction sector, the steam engine of its economy.

Finance Minister Harris Georgiades presented five tax bills in parliament on Thursday aimed at encouraging foreign nationals to invest in property but also to set up businesses in Cyprus.

Cyprus' economy has shown signs of moving out of a four-year-long stagnation after being pulled from the brink of bankruptcy in a 10-billion-euro (11.1 billion U.S. dollars) financial assistance agreement in March, 2013.

Tax breaks offered to foreign nationals are aimed at beefing up activity in the construction sector which has just started to display signs of a feeble recovery.

The construction sector is contributing about 17 percent to the gross domestic product, relative to just 12 percent from tourism, which is currently the principal sector helping economic recovery.

The tax package includes a 50 percent reduction of transfer fees on real estate transactions and also a tax exemption on capital gains from the sale of property which will be purchased up to the end of 2016.

Georgiades said that the new legislation introduces a new status of "tax-residents" for foreign nationals who will have the benefit of a discount of tax on their assets.

"The 'non-domicile' status is aimed at attracting business executive and people of high income to Cyprus by exempting them from certain tax obligations," said Georgiades.

He said tax reductions are also offered for investment in new businesses and an extension up to the end of 2016 of a capital discount/depreciation for machinery, installations and buildings. Endit