Taxation, encompassing income tax, immovable property tax, capital gains tax, inheritance tax, and value-added tax, is a crucial consideration for both residents and non-residents when purchasing property in Cyprus.

Residents in Cyprus are obligated to pay Cypriot income tax on their global earnings. Fortunately, tax rates in Cyprus are notably low, making it an attractive destination for retirees. Moreover, Cyprus has double taxation agreements with numerous countries, aiming to prevent income from being taxed twice. Another advantage of living in Cyprus is the absence of wealth, gift, or inheritance taxes.

Cyprus has historically been recognized as a favorable tax jurisdiction, fostering its success as a financial hub in Europe. In the 1970s, the government introduced tax incentives to attract offshore businesses. However, to align with EU standards and OECD initiatives against unfair tax practices, Cyprus updated its tax laws significantly on January 1, 2003, which temporarily impacted the nation's economy.

Key changes to Cyprus's tax code since January 1, 2003, include:

1. Individuals residing in Cyprus for more than 183 days during a calendar year are subject to local taxes on their worldwide income. Non-residents are taxed only on income earned within Cyprus.

2. The terms "resident" and "non-resident" have replaced the previous terms "alien" (foreigner) and "citizen of the Republic" in taxation.

3. Exchange controls and restrictions on money import and export have been abolished in accordance with EU regulations, gradually liberalizing financial and banking institutions.

While Cyprus's tax laws now conform to those of other EU countries, the nation still maintains relatively low tax rates. Depending on individual circumstances, becoming a tax resident in Cyprus instead of one's home country may lead to substantial tax savings. Therefore, seeking professional advice is essential to optimize tax strategies.