Cyprus has introduced significant changes to its tax residency regulations, effective January 1, 2026, offering retirees more flexibility in establishing residency.

Previously, the 60-day tax residency rule required individuals to not be tax residents in any other country. This condition has now been removed, allowing retirees to qualify as tax residents in Cyprus even if they maintain tax residency elsewhere. To qualify under the 60-day rule, retirees must:

- Spend at least 60 days in Cyprus during the tax year.

- Not spend more than 183 days in any single other country.

- Carry out business in Cyprus, be employed in Cyprus, or hold an office in a Cyprus tax resident company during the tax year.

- Maintain a permanent home in Cyprus, whether owned or rented.

These adjustments aim to attract retirees seeking a favorable tax environment without the need to sever ties with their home countries.

Additionally, the annual tax-free threshold has increased from EUR 19,500 to EUR 22,000, providing further tax relief to retirees. Taxable income exceeding this threshold is subject to progressive tax rates, with the highest rate set at 35% for income over EUR 72,000.

These reforms are part of a broader tax overhaul approved by the Cyprus Parliament in December 2025, marking the most substantial updates to the country's tax system in over two decades. The changes aim to improve tax compliance, support economic growth, and create a more equitable tax system.

Retirees considering Cyprus as a destination can now benefit from these streamlined residency and tax provisions, making it an increasingly attractive option for those seeking a favorable retirement environment.

Sources: Cyprus Mail, PwC, EY, Nexora Cyprus, SPL