Moving to Cyprus: A Complete Tax Guide for US Expats

Cyprus, often called the heart of the Mediterranean, is known for its sunny climate and relaxed lifestyle, making it an increasingly popular destination for Americans abroad. Whether you’re drawn by the beaches of Limassol, the charm of Nicosia, or opportunities under Cyprus’s Digital Nomad or Golden Visa programs, life here offers a unique blend of work and leisure.

For US citizens moving to Cyprus, the journey comes with more than lifestyle adjustments; it also means staying on top of two tax systems. Even abroad, the IRS requires annual tax filings, and in Cyprus, where residency rules and local taxes apply, double taxation is a key concern.

Fortunately, with the right tax strategies, you can significantly reduce or even eliminate your US tax liability. In this guide, we cover everything you need to know as a US expat moving to Cyprus, from filing taxes to visas and essentials like healthcare.

Cyprus Taxes

As a US expat living in Cyprus, you may be required to file a Cypriot tax return depending on your residency status and income. Residents are taxed on their worldwide income, while non-residents are taxed only on Cyprus-sourced income. In Cyprus, the first €19,500 of income is tax-free, with progressive tax rates applying to income above that threshold.

Tax Residency in Cyprus

Like many countries, Cyprus determines tax residency based on time spent in the country or ties to it. The standard rule is 183 days in Cyprus during a calendar year. However, Cyprus also offers a “60-day rule” where you can qualify as a tax resident with just 60 days.

To qualify under the 60-day rule, you must not be tax resident elsewhere, spend at least 60 days in Cyprus, and have strong ties to the country such as business, family, employment, or a permanent home. However, Americans cannot use this rule, since all US citizens and permanent residents are considered US tax residents regardless of where they live.

Cyprus taxes residents on their worldwide income, while non-residents pay tax only on Cyprus-sourced income.

• Residents: Must file by July 31 of the following year, though the government sometimes extends deadlines into September or October.
• Non-residents: Must file by the same deadlines if they have Cyprus-sourced income that requires a return.

The tax due dates tend to vary from year to year. For the 2025 tax year (filed in 2026), the deadline is expected to be July 31, 2026, but this may be extended, as has happened in prior years.

Non-Domiciled Tax Residents in Cyprus

Cyprus distinguishes between tax residency and domicile status. While many expats become tax residents under the 183-day or 60-day rule, they may still be considered non-domiciled if they have not established long-term ties to Cyprus.

Residents who are not considered domiciled in the country don’t pay the Special Defence Contribution (SDC) on passive income like dividends or interest. However, they still owe all regular income taxes.

Cyprus Deadlines (for 2025 income, filed in 2026)

In Cyprus, each taxpayer must file their own return; joint filings are not allowed. All returns are submitted electronically through the TAXISnet portal, the official online system managed by the Cyprus Tax Department. Deadlines vary depending on your situation, as shown below:

Return Type	Deadline
Employees & Pensioners (Form T.D.1)	July 31, 2026
Self-employed (turnover ≤ €70,000, no audited financials)	July 31, 2026
Self-employed (turnover > €70,000, audited financials required)	March 31, 2027
Final tax payment	January 31, 2027

Personal Income Tax Rates in Cyprus

Cyprus applies a progressive income tax system, with rates ranging from 0% to 35% depending on income level. Both residents and non-residents are subject to these rates, though non-residents are taxed only on Cyprus-sourced income.

Income Bracket	Tax Rate
Up to €19,500	0%
€19,501 – €28,000	20%
€28,001 – €36,300	25%
€36,301 – €60,000	30%
Above €60,000	35%

Social Security Tax

In Cyprus, both employees and self-employed individuals must pay into the national social insurance system, but the rates differ. Employees contribute 8.8% of their gross salary, matched by an equal amount from their employer, up to the annual cap of €66,612 for 2025. The self-employed pay a higher rate of 16.6% of their insurable earnings, also subject to the same cap. The contribution rates rise every five years and are scheduled to reach 10.7% for employees and 20.4% for the self-employed by 2039.

Healthcare Contributions (GHS)

In addition to social insurance, Cyprus levies a separate healthcare contribution under the General Healthcare System (GHS). Employees contribute 2.65% of their salary, while the self-employed pay 4%. Pensioners and individuals with certain types of passive income must also contribute. This system ensures broad funding for public healthcare.

Capital Gains Tax

Most capital gains are exempt in Cyprus. However, gains from selling immovable property located in Cyprus or shares in companies that own such property are subject to a 20% capital gains tax.

Certain exemptions apply, such as gains from a primary residence, provided it has been your main home for at least five years (up to a lifetime limit of €85,430).

Corporate Tax

Cyprus imposes a flat corporate income tax rate of 12.5%, one of the lowest in the European Union. This rate applies to both resident companies (taxed on worldwide income) and non-resident companies (taxed only on income sourced in Cyprus).

Certain types of income may qualify for favorable treatment under Cyprus’s notional interest deduction (NID) rules designed to attract international business.

Dividends & Interest Tax

Dividend income is generally taxed at 17%, while interest income is taxed at 30%. Certain Cyprus-based investments may qualify for a reduced 3% rate on interest. Non-domiciled residents are exempt from these taxes.

Value-Added Tax (VAT)

Cyprus levies a standard value-added tax (VAT) of 19% on most goods and services. Reduced rates apply to certain categories:

• 9% VAT: Accommodation, restaurants, and local passenger transport services
• 5% VAT: Essential items such as food and pharmaceutical products; this rate also applies to certain new residential property purchases
• 3% VAT: Books, magazines, newspapers, cleaning services, and artistic performances
• 0% VAT: Educational services, medical services, and financial services

This system is designed to balance revenue collection with affordability for key goods and services while supporting sectors like tourism and housing.

Wealth Tax

Unlike many European countries that levy a wealth tax, Cyprus does not impose one, making it an appealing option for high-net-worth individuals.

Inheritance & Gift Tax

Cyprus does not levy inheritance or gift taxes.

Property Taxes in Cyprus

Cyprus does not levy an annual property tax; it was abolished in 2017. However, several other taxes and fees apply to property transactions:

• Property transfer fees: 3% to 8% depending on the property’s value. These fees do not apply when the purchase is subject to VAT, and reduced rates may apply in transfers between family members or trustees.
• Mortgage registration fees: 1% of the amount secured.
• Stamp duty: Ranges from 0% to 0.2% depending on the property’s value.

Together, these charges mean that while there is no recurring annual property tax, property buyers in Cyprus should still budget for transaction-related taxes and fees.

Dividends & interest

Generally 17%; 3% for certain Cyprus-based investments

Deductions & Allowances in Cyprus

Cyprus offers a range of deductions and allowances that can reduce your taxable income:

Common deductions include:

• Charitable contributions (with receipts)
• Life insurance premiums (up to 7% of the insured amount)
• Contributions to social insurance and pension funds
• Employment-related expenses
• Ordinary business expenses that are necessary to generate income

These allowances, while limited, can help lower your overall tax bill if you qualify.

Special Expat Tax Regime

While Cyprus doesn’t have a single unified expat program like some countries, it offers a package of tax incentives designed to attract foreign professionals and investors. These measures can significantly reduce the tax burden for newcomers.

The core benefits include:

• 50% Tax Exemption on Employment Income Foreign employees earning more than €55,000 per year can exclude 50% of their salary from income tax. This applies for 17 years, provided the individual was not a Cyprus tax resident for at least 10 of the previous 12 years.
• 20% Tax Exemption (alternative) Employees earning less than €55,000 may claim a 20% exemption (up to €8,550 annually). This applies for the first 7 years of residence.

Do I Need to File US Taxes from Cyprus?

Yes, the United States is one of only two countries in the world that taxes based on citizenship rather than residency. As a US citizen or Green Card holder, you must file a US tax return each year, even when all of your income comes from Cyprus.

For the 2024 tax year, here are the minimum income thresholds set by the IRS that determine whether you must file a US tax return. These thresholds are adjusted annually for inflation:

Filing Status	Income Threshold
Single	$14,600
Married Filing Jointly	$29,200
Married filing separately	$5
Self-employed	$400
Qualifying Widow(er)	$29,200
Head of household	$21,900

Even if your Cypriot income is taxed locally, the IRS still requires you to report and pay taxes on your worldwide income. Fortunately, expat tax benefits such as tax treaties, credits, and exclusions can help reduce or even eliminate the risk of double taxation.

US Deadlines (for 2025 income, filed in 2026)

As a US expat in Cyprus, you automatically receive a 2-month filing extension to file your US return. Keep in mind, though, that any taxes owed are still due by April 15th to avoid interest and penalties.

Filing	Deadline
Standard US Tax Return (expats get an automatic extension)	April 15, 2026 (expats: June 15, 2026)
Extended US Tax Return (if Form 4868 filed by June 15, 2026)	October 15, 2026
FBAR (FinCEN 114)	October 15, 2026

Avoid Double Taxation with US Expat Tax Benefits

The United States and Cyprus have a tax treaty in place to help prevent double taxation and clarify which country has the right to tax certain types of income. However, unlike some European countries, Cyprus does not have a totalization agreement with the US, which means there is no coordination of Social Security contributions between the two systems.

In addition, the IRS provides tax breaks that can further reduce or even eliminate your US tax bill while living in Cyprus.

Foreign Earned Income Exclusion (FEIE)

The IRS gives Americans abroad a powerful way to lower their US tax bill through the Foreign Earned Income Exclusion (FEIE). For the 2025 tax year, you can exclude up to $130,000 of foreign earned income from US income tax, including salary, wages, or self-employment income.

To be eligible, you must meet one of two residency tests:

• Bona Fide Residence Test — you are a resident of a foreign country for an entire tax year.
• Physical Presence Test — you spend at least 330 full days outside the US during any 12-month period.

Both the FEIE and the Foreign Housing Exclusion are claimed using IRS Form 2555.

Foreign Housing Exclusion (FHE)

In addition to the FEIE, you may also lower your taxable income through the Foreign Housing Exclusion. If you qualify for the FEIE and file Form 2555, you can exclude housing costs such as rent, utilities, and insurance. For the 2025 tax year, you must have qualified housing expenses above $20,800. The IRS caps the exclusion at $39,000 under the standard limit, which means you can exclude up to $18,200 in housing costs. These amounts adjust annually for inflation, and higher caps may apply in high-cost cities such as Limassol or Nicosia, where living expenses are significantly above the Cyprus average.

Self-employed expats claim this benefit as a deduction rather than an exclusion, though the overall effect on taxable income is the same.

Foreign Tax Credit (FTC)

The Foreign Tax Credit (FTC) allows US expats to reduce their IRS bill by applying a dollar-for-dollar credit for income taxes already paid to Cyprus. You can apply the Foreign Tax Credit to both earned income (like wages) and passive income (like dividends or interest). If the Foreign Earned Income Exclusion (FEIE) doesn’t cover all of your earned income, you can often apply the FTC to the remainder. The FTC is especially useful if your Cypriot taxes are higher than your US taxes, since you can carry forward any unused credits for up to ten years or back one year. You claim the FTC by filing IRS Form 1116.

Child Tax Credit (CTC)

For the 2025 tax year, the Child Tax Credit (CTC) allows US taxpayers to reduce their federal tax bill by up to $2,200 per qualifying child under age 17. Up to $1,700 of this amount may be refundable through the Additional Child Tax Credit (ACTC). It’s important to note that if you claim the Foreign Earned Income Exclusion (FEIE), you cannot use that excluded income to qualify for the refundable portion of the ACTC.

US–Cyprus Tax Treaty

The US–Cyprus tax treaty is designed to prevent double taxation and establish which country has the right to tax specific types of income, such as salaries, pensions, dividends, and business profits. In practice, the treaty can help reduce or even eliminate taxes on certain sources of income.

However, like most US tax treaties, the Savings Clause allows the IRS to continue taxing US citizens and Green Card holders as if the treaty did not exist, limiting some of the treaty’s benefits. Still, the agreement is valuable for clarifying taxing rights and for supporting the use of foreign tax credits (FTC) to offset US tax liability on income already taxed in Cyprus.

Self-Employment Tax

If you are self-employed and earn $400 or more annually, you must file a US tax return no matter where you live. Normally, self-employed Americans owe 15.3% in US self-employment tax on their net earnings.

Because the United States and Cyprus do not have a totalization agreement, Americans living in Cyprus may be required to contribute to both the US and Cyprus Social Security systems. This can significantly increase the overall tax burden for self-employed expats.

While the Foreign Earned Income Exclusion (FEIE) and Foreign Tax Credit (FTC) can reduce or even eliminate US income tax liability, neither reduces self-employment tax.

FBAR & FATCA: Reporting Foreign Financial Accounts and Assets

As a US expat in Cyprus, you’re not only responsible for filing your US tax return, but you may also need to report foreign financial assets if they exceed certain thresholds. These additional requirements fall under the Foreign Bank Account Report (FBAR) and the Foreign Account Tax Compliance Act (FATCA), which are designed to ensure overseas assets are disclosed to the IRS.

• FBAR (FinCEN Form 114): If the total value of your foreign bank accounts combined exceeds $10,000 at any point during the year, you must file an FBAR. This form is submitted separately from your tax return.
• FATCA (IRS Form 8938): Expats must also report foreign assets on Form 8938 if their value exceeds $200,000 at year-end or $300,000 at any point during the year.

Thresholds are different for Americans living in the US and those filing jointly.

Investing in Cyprus as a US Expat

When it comes to investing while living abroad, US expats need to be especially cautious with foreign mutual funds, ETFs, and other pooled investments. The IRS generally classifies these as Passive Foreign Investment Companies (PFICs), which come with punitive tax treatment and complex reporting requirements. Each PFIC must be reported annually on Form 8621, and income is often taxed at the highest ordinary rates, sometimes with interest charges added. This treatment can quickly erode or even wipe out any investment gains, leaving US expats with little benefit.

Because of this, it’s recommended that you stick with US-domiciled mutual funds and ETFs. These remain under familiar US tax rules and don’t trigger PFIC reporting, making compliance far simpler and more tax-efficient on the US tax side. Of course, review local tax reporting rules as well.

Retirement Accounts (IRAs and Roth IRAs)

As a US expat in Cyprus, you may still be able to contribute to traditional or Roth IRAs, up to $7,000 per year for 2025 (or $8,000 if you’re age 50 or older), provided you have qualifying earned income and meet the adjusted gross income limits for your filing status. These accounts offer important tax advantages and can help you keep your retirement savings on track while living abroad.

Note: Cyprus does not automatically recognize the tax-deferred status of US retirement accounts. This means contributions, and in some cases investment growth, may be taxable locally, even if they are tax-advantaged in the US. The exact treatment can depend on your residency and domicile status, so expats should seek local tax advice.

Visas for US Citizens in Cyprus

Most Americans moving to Cyprus will need a residence permit or long-stay visa, depending on the purpose of their stay. Short visits (up to 90 days in any 180-day period) are allowed under Cyprus’ visa-free entry rules for non-EU nationals.

It’s important to note that Cyprus is an EU member but not yet part of the Schengen Area. The country is aiming to join Schengen by 2026, but accession has been delayed due to political and border-control issues.

For longer stays, Cyprus offers attractive residency options, including the Digital Nomad Visa and the Golden Visa.

Digital Nomad Visa

Cyprus introduced the Digital Nomad Visa in 2021 to attract remote workers and freelancers. It targets professionals employed outside Cyprus who want to live on the Mediterranean while working remotely. Applicants must show a minimum monthly income of €3,500 (after tax), with higher thresholds applying if they have dependents.

Golden Visa / Permanent Residency by Investment

Cyprus offers a popular residency-by-investment pathway for non-EU nationals. Through the Golden Visa program, applicants can obtain permanent residency by making a qualifying investment of at least €300,000 (typically in real estate, though certain shares and funds are also eligible).

In addition to the investment, applicants must prove a secure annual income of at least €50,000, plus €15,000 for a spouse and €10,000 for each dependent child. In May 2023, authorities introduced these higher thresholds, replacing the previous requirement of around €30,000.

The permit can cover spouses and dependent children (up to age 25 if unmarried and studying). It is permanent and does not require renewal, but holders must visit Cyprus at least once every two years to maintain the status.

Other Residency Pathways for Non-EU Nationals

Beyond the Digital Nomad and Golden Visa programs, Cyprus also offers work, study, and family reunification visas. These pathways allow non-EU nationals to join relatives living in Cyprus, work for a local company, or pursue higher education at accredited Cypriot institutions. Each category has its own requirements, such as proof of income, housing, admission letters, and health insurance.

Healthcare in Cyprus

The General Healthcare System (GHS) funds healthcare in Cyprus through mandatory contributions; see the tax section above for details on rates. The system ensures that all residents, including expats, have access to affordable medical care.

As a US expat in Cyprus, you have several options:

• Public healthcare (GHS): Once you register as a resident and start contributing, you can access doctors, specialists, hospitals, and prescriptions through the GHS. Patients usually pay a small co-payment, depending on the service or medication.
• Private healthcare: Many expats also use private clinics and hospitals, which are widely available and offer shorter wait times. Costs are generally lower than in the US, but without GHS coverage, bills are out of pocket or handled through private insurance.
• Supplemental insurance: Some expats choose additional private insurance to cover services outside GHS or to access private hospitals with more amenities.

Until you become enrolled in GHS, you’ll need private health insurance to cover the gap, and proof of this is usually required for residence permit applications.

Cost of Living in Cyprus

For US expats, the cost of living in Cyprus is generally lower than in many parts of the United States and Western Europe, though it varies by city. Housing is more affordable than in major American cities, with a one-bedroom apartment in Nicosia or Limassol usually renting between $900 and $1,400 per month. At the same time, smaller towns and coastal villages are even cheaper. You’ll find everyday groceries like bread, fresh fruit, and dairy reasonably priced, but imported goods and American brands often cost more.

Transportation differs significantly from other parts of Europe and the US. Cyprus has a limited public transit system, mostly buses, so many residents and expats rely on owning a car. Fuel is relatively affordable, and the island’s size makes commuting manageable, but purchasing and maintaining a car becomes a necessary expense for most.

Some typical monthly costs for expats include:

• Utilities: $150–$250, higher in summer due to air conditioning
• Internet: $35–$50, reliable but slightly higher than in many EU countries
• Phone plans: $15–$20 for SIM-only options

Overall, Cyprus offers a comfortable lifestyle at a lower cost than most large US cities, though reliance on cars and the price of imports add to the budget.

Simplify Your US Expat Tax Filing with MyExpatTaxes

We know expat taxes can feel overwhelming, especially when balancing two systems at once. Whether you’re working remotely under Cyprus’s Digital Nomad Visa, building a new career, or simply enjoying the island’s Mediterranean lifestyle, staying compliant doesn’t have to be stressful. With MyExpatTaxes, you can file confidently, avoid overpaying, and focus on making the most of your life abroad.

Sign up now and get started!

Frequently Asked Questions