Retirement in Cyprus: how profitable and comfortable is it to move to the island at an older age

Cyprus is rapidly gaining investor loyalty as one of the most popular foreign destinations: the share of foreigners among home buyers on the island has been 44% in the last two years, and the country itself is ranked among the best places to retire.

Cyprus attracts migrants and older people from all over the world with a combination of comfort and opportunities: a favorable tax regime, a reasonable cost of living index, an active expat community, a mild climate and as many as 320 sunny days a year. But how profitable and comfortable is it to move to Cyprus at an older age?

To understand in more detail, let’s look at the main factors:

1. The tax regime and benefits for pensioners.
2. Transport accessibility relative to other countries of the world.
3. The visa regime and the possibility of obtaining permanent residence.
4. Climate, seasonality and specificity of the natural landscape.
5. The economic development of the country and the cost of living.
6. Accessibility and quality of medical services.
7. The variety and quality of services, socio-cultural and entertainment infrastructure.

The content of the article

1. 1. Tax regime and benefits for pensioners in Cyprus
   1. Fixed tax rate of 5% on pension income
   2. Exemption from taxes on other sources of income
2. 2. Transport accessibility of Cyprus relative to other countries of the world
3. 3. Visa regime and permanent residence in Cyprus
   1. Immigration Permit of category F
   2. Permanent residence program for real estate investments in Cyprus
4. 4. Climate, seasonality and specificity of the natural landscape of Cyprus
5. 5. The economic development of Cyprus and the cost of living on the island
   1. Cyprus Real Estate Market
   2. The cost of living in Cyprus
6. 6. Availability and quality of medical services in Cyprus
   1. State medical insurance
   2. Private health insurance
7. 7. Variety and quality of services, socio-cultural and entertainment infrastructure

1. Tax regime and benefits for pensioners in Cyprus

Cyprus is one of the few countries in the world that allows you to obtain tax resident status along with significant benefits if you stay here for less than 183 days a year.

To become a tax resident, it is enough to live on the island for 60 days and have economic (for example, be a shareholder or director of a Cypriot company) or vital interests (housing owned or long-term leased).

In addition, in order to maintain their status, a Cyprus tax resident should not spend more than 183 days a year outside the island and become a tax resident of any other country.

It is beneficial for older people with high global income to become a tax resident of Cyprus.

Below we will analyze the main advantages of the tax system for pensioners.

Fixed tax rate of 5% on pension income

The main advantage is the ability to pay tax at a reduced fixed rate of 5% on foreign pension income exceeding 3,420 euros per year.

At the same time, the taxpayer can choose the standard rate if it seems more profitable.

In some cases, a pension paid in a European country may be transferred to a Cyprus bank account in accordance with the terms of a special agreement between Cyprus and other States. This is what the UK does in relation to its citizens living in Cyprus.

Exemption from taxes on other sources of income

In Cyprus, you can get tax exemption for:

• dividends;
• interest (but if interest is paid to a company from a country that is on the EU blacklist, the tax rate will be 30%);
• lump sum payments-retirement benefits;
• capital amounts from payments to approved funds (reserve funds, life insurance policies or pension funds).

A foreign pensioner does not need to pay the Cyprus Special Defense Contribution (SDC).

There are also no inheritance or gift taxes on the island, meaning the property can pass to heirs without paying local tax.

It is worth paying attention to the fact that according to the laws of Cyprus on inheritance after death, 75% of the property should go to the next of kin, so it is important not to neglect the preparation of a will.

Consider an example of benefits for a British citizen who plans to move to Cyprus

According to the Double Taxation Agreement between the UK and Cyprus:

• most of the pension income is taxed only in Cyprus;
• lump-sum pension payments in Cyprus are tax-free.

It is important to note that civil servants’ pensions are taxed in the UK, and if a pensioner decides to receive the entire pension in a lump sum, it will also be taxed in the UK The United Kingdom.

Among other things, you need to take into account the status of residence in Cyprus: full relocation or temporary. Your tax status in your current country of residence and applicable tax obligations depend on this.

So, a relocant from the UK, in case of return to The United Kingdom will pay income tax, income tax and foreign income in the UK.

Non-Domicile status in Cyprus and its advantages

Cyprus has a special tax regime for those who do not have domicile on the island. This regime exempts from paying the defense contribution and, as a general rule, tax on income earned outside Cyprus.

Other taxes for individuals in Cyprus

Income tax

It is calculated at a progressive rate from 0 to 35%.

Tax on income from renting out real estate

It ranges from 20 to 35%, depending on the total annual income. VAT may occur at a rate of 19% in the case of renting commercial real estate.

Capital gains tax on the sale of real estate in Cyprus

It is applied at a rate of 20%, taking into account some exemptions and benefits.

Cyprus has concluded tax agreements for the avoidance of double taxation (DTT) with more than 60 countries around the world. Among other things, Cyprus has one of the most favorable tax regimes for companies.

Today Cyprus is one of the countries with the most comfortable tax system. It is beneficial for people with high global income to become a tax resident of the country. At the same time, for each specific case and country, you should familiarize yourself with the nuances.

2. Transport accessibility of Cyprus relative to other countries of the world

The geographical location of Cyprus makes it a strategically important place to move to both European and Middle Eastern countries. However, there are only two international airports on the island — in the cities of Paphos and Larnaca.

Passenger traffic at Cyprus airports in 2023 reached a record level of 11.6 million people, exceeding the pre-pandemic figures by 3%. Thus, Larnaca Airport served 8.1 million passengers in 2023 (+34% compared to 2022), Paphos Airport — 3.6 million people (+12% compared to 2022).

Airports are expanding. During 2023, 18 new cities were added to the schedule, mainly in European and Middle Eastern destinations.

Flights within Europe take from 4 hours, you can fly to the UK in 5 hours. The countries of the Middle East can be reached in 4 hours.

Currently, there is a direct flight service between Cyprus and Russia does not, but access is provided through third countries such as Turkey and Serbia.

The undeniable advantage of Cyprus residency is unhindered travel within the borders of the European Union and visa—free entry to 176 countries.

3. Visa regime and permanent residence in Cyprus

Cyprus provides an opportunity to obtain one of the most affordable residence permits in Europe, while maintaining dual citizenship. Cyprus has been a member of the European Union since 2004, but a decision on its accession to the Schengen area has not yet been made, and it is expected that this will happen before the end of 2025.

The period of stay in Cyprus on a type C visa (tourist visa) is limited to 90 days for six months. EU citizens can stay on the island without restrictions, but they must register with the migration authorities within four months after moving to Cyprus in order to obtain a certificate of registration of EU citizens.

Citizens of non-EU countries can obtain a guest, work or student residence permit (Pink Slip).

Cyprus does not have a special visa for pensioners who are not citizens of EU countries, but they can legalize their stay in the country under the permanent residence program for Immigration Permit category F, the permanent residence program for real estate investments and a guest residence permit that allows you to live in Cyprus for no longer than a year without the right to work.

Let’s take a closer look at the visas available for pensioners who intend to move to Cyprus.

Immigration Permit of category F

Permanent residence program for immigrants coming to Cyprus from outside the EU. It is available to those who receive passive income from abroad (the minimum annual income is from 9568 euros for the applicant and from 4613 euros for each dependent) and does not conduct economic activities in Cyprus.

This category includes pensioners, who account for the majority of applicants.

Basic requirements:

• confirmed foreign source of income;
• purchased or rented accommodation in Cyprus;
• lack of economic activity in Cyprus;

Immigration Permit of category F is granted only for the applicant, spouse and children. Permanent residence will be cancelled if the applicant is absent from Cyprus for two years.

Such permanent residence is valid for 10 years upon confirmation of income retention, then it can be extended.

Permanent residence program for real estate investments in Cyprus

The Permanent residence program for investments in real estate in Cyprus is one of the easiest and fastest ways to obtain an indefinite residence permit for people who are not EU citizens. This program greatly stimulates the real estate market on the island.

According to Tranio, almost 60% of buyers of Cypriot real estate in the first quarter of 2024 associate real estate investments with the possibility of moving, and for Russian demand, the permanent residence program remains the main driver of buying new buildings on the island.

A residence permit (permanent residence) is issued indefinitely, while it is not necessary to stay on the island regularly — it is enough to visit Cyprus at least once every two years.

Requirements for the applicant for permanent residence in Cyprus

• purchase of real estate (1 or 2 objects in a new building) in the amount of 300 thousand euros (+ VAT 5% or 19%);
• official confirmation of payment of at least 200 thousand euros (+ VAT) from the amount of investment, regardless of the date of delivery of housing;
• stable income from abroad;
• a term deposit account with the Bank of Cyprus for 3 years in the amount of 30 thousand euros, funds must be received from abroad (an increase in the deposit threshold is being discussed);
• medical insurance;
• certificate of no criminal record;
• statement of absence of intention to engage in labor activity in Cyprus (you can be shareholders of a company registered in Cyprus and receive dividends);
• marriage certificate, birth certificates of children (with certified translation).

We analyze in detail the requirements for the applicant and the process of obtaining permanent residence in Cyprus in a separate article.

In the period from 2013 to 2020, Cyprus had a program that allows you to obtain citizenship in exchange for investments in the amount of 2 million euros. However, this program was discontinued on November 1, 2020.

Today, in order to obtain Cyprus citizenship, it is necessary to live in the country continuously for seven years. It is also possible to obtain citizenship through marriage with a Cypriot citizen.

4. Climate, seasonality and specifics of the natural landscape of Cyprus

Cyprus is known for its warm climate: 320-340 sunny days a year, summer lasts almost all year round, and the hot months, July and August, are offset by mild winters.

Due to the 350 km long coastline and the size of the island, the sea can be easily reached from anywhere. The beaches here are clean, many of them are marked with a Blue flag.

Cyprus is located in a seismically active zone, at the junction of the Eurasian and African tectonic plates. On average, there are 27 earthquakes per year, most of which have a magnitude of 2-4. All buildings on the island are built according to strict antiseismic regulations to ensure the safety of residents.

5. The economic development of Cyprus and the cost of living on the island

The economy of Cyprus is demonstrating stability, outpacing the European Union average, and the forecast for the coming years is optimistic.

Data from the European Commission from May 2024:

• Cyprus’ GDP growth in 2023 was +2.5%. This is significantly higher than the EU average (+0.4%). The main driving forces of the economy are tourism and private consumption.

• Inflation dropped to 3.9% in 2023 (from 8.1% in 2022). The forecast for the next two years is 2.4% in 2024 and 2.1% in 2025.

• Unemployment continued to decline to 6.1% in 2023 (from 6.8% in 2022) due to growth in tourism and hotel services. A downward trend in unemployment is expected in the coming years: up to 5.6% in 2024 and 5.4% in 2025.

Cyprus Real Estate Market

The real estate market has been growing since 2017, but the coronavirus pandemic and the cancellation of the citizenship by investment program in November 2020 have made adjustments.

A new phase of demand growth began in 2021, along with the recovery from the pandemic and new government measures to attract companies to the country. These measures had a positive impact on both the economy as a whole and the residential real estate market (both buying and renting).

In 2023, the number of transactions in the real estate market increased by 16% compared to 2022 to 15,567 units. Limassol accounts for the most transactions (33% of all transactions) and Paphos (22%).

Cyprus is rapidly gaining the loyalty of foreigners as one of the most popular foreign destinations: their share among home buyers on the island has been 44% in the last two years.

In 2023, foreigners purchased 6,900 properties in Cyprus — 16% more than in 2022, and 87% more than in 2021. A significant proportion of buyers, most of whom are non-Europeans, are attracted by the leisurely noble Pathos and bright and dynamic Limassol (34% of the total number of transactions in 2023 each).

In 2024, these same regions are in the greatest demand among foreign investors and Russians in particular: in the first quarter of 2024, 32% of Tranio’s clients considered buying real estate in Paphos, and 29% in Limassol.

Real estate in Cyprus is affordable for retirees. Despite the fact that the cost of real estate depends on the type of object and region: in Limassol, it is approaching the European average.

In Paphos and other cities, you can buy more affordable housing. Thus, the cost per square meter in the center of Limassol, according to the Numbeo website, ranges from 3,500 to 5,950 euros, in Paphos from 1,250 to 4,430 euros, in Athens from 2,000 to 5,000 euros, in Madrid from 3,300 to 7,000 euros, in Lisbon from 4,000 to 9,000.

Prices per m2 by area of Cyprus in April-May 2024, according to the Numbeo website:

• Limassol: 3500-5950 € (the most expensive property in the country);
• Paphos: 1250-4430 €;
• Nicosia: 1800-4000 €;
• Larnaca: 2200-4000 €.

When buying a home, it must be remembered: foreigners have the right to own a plot of land under a real estate object, but there is a limit on the size of the plot — no more than 4,014 square meters.

In addition, when buying property in Cyprus, citizens of countries outside the European Union must comply with the following conditions:

• The purchase of a second home may be allowed depending on the type of use (for example, for recreation in addition to permanent housing);
• It is necessary to obtain permission from the Council of Ministers of Cyprus to purchase property (the application review period is up to three months).

The cost of living in Cyprus

The cost of living in Cyprus is lower than in the UK and many Western European countries. However, it is higher than in Greece, and may vary depending on the city.

According to Numbeo and a survey of local residents, for a comfortable life in Cyprus, you need from 860 to 3,000 euros per month (excluding the cost of rent).

We analyze in detail how much life in Cyprus costs in a separate article.

The cost of maintaining the property ranges from 280 to 400 euros per month. Electricity prices can be high, especially in the summer months when the use of an air conditioner is required.

Transportation costs range from 80 to 260 euros per month, depending on whether you use a car or public transport. The public transport system in Cyprus is poorly developed: transport services are limited in many areas, and in some there are none at all. There is no railway system, and private taxi services can be expensive.

Good news for car owners: Cyprus has agreements with some countries that allow the import of personal cars and recognize driving licenses. For importing your own car from There is no EU or UK tax on Cyprus.

Both a citizen of the country and a foreigner can open a bank account. For example, Alpha Bank Cyprus and AstroBank work with non-residents. However, those foreigners who have a residence permit or permanent residence in Cyprus are more likely to open an account in a Cypriot bank.

6. Availability and quality of medical services in Cyprus

Life expectancy in Cyprus is significantly higher than the European average. Men live here on average up to 81 years, and women — up to 85 years.

The secret of a long and happy life for residents of Cyprus is the quality of food and products of local farmers. The warm climate allows for several harvests of fruits and vegetables per year — residents constantly have access to fresh organic products, and proximity to the sea makes it possible to easily include seafood in their diet.

The mild climate of the island allows you to lead an active lifestyle all year round. Hiking, morning swims in the warm sea and outdoor sports are becoming an integral part of everyday life.

In addition, Cyprus has a convenient healthcare system, and medical services are available and can be provided free of charge.

State medical insurance

To receive medical care in Cyprus, you need to register at The General Health System of Cyprus (General Health System, GESY) and choose a local doctor. This can be done online on the website of the State Health Service.

According to the GESY program, the service is provided free of charge or for a partial payment.

The following can apply for GESY:

• employees of a Cypriot employer;
• EU citizens who have permanent residence in Cyprus and their family members;
• foreign residents with a source of income in Cyprus (for example, businessmen who pay tax on dividends and property owners who receive rent);
• foreign residents with permanent residence and their family members.

EU citizens can claim free medical benefits if they have a European Health Card, which entitles the bearer to state health insurance for a limited period of time.

The State medical system includes 9 public hospitals and 38 medical centers in all cities and districts of the island.

Persons who do not receive state health insurance can use the services of public hospitals for a fee.

The cost of GESY services

A visit to a therapist and inpatient treatment are free of charge. The cost of other types of services and medicines is minimal:

There is a price ceiling for paid services: 150 euros per year.

The GESY system is funded by contributions that come from social security services, the Tax Department and the Treasury. All residents of the island who receive income are required to contribute to GESY, regardless of where they live — in Cyprus or abroad, whether they are tax residents or not.

The maximum total amount of income from which deductions are made is 180 thousand euros. The rate is fixed annually and for this period is 2.65% of the annual income, so the maximum amount of the GESY contribution is 4770 euros.

More than 80% of citizens are currently registered in the GESY system and use both the services of public clinics and private doctors and medical centers that have signed contracts with the system.

There is an emergency medical service in Cyprus, but it is slow to work, it is better not to rely on it. Some private hospitals have their own ambulance services, which can be used for a fee.

For GESY owners, the ambulance call will be free of charge. If the patient does not have insurance, the cost of the call will be 75 euros per hour.

Private health insurance

If you are not a citizen of the country EU and do not pay contributions to the Cypriot social insurance system, you need to purchase health insurance. This is a mandatory requirement for obtaining a residence permit and Permanent residence in Cyprus.

There are two main types of private health insurance:

• hospital only — covers the costs of hospitalization and all hospital expenses, for example, surgery;
• inpatient and outpatient expenses — also includes doctor’s visits and medications.

Plans that cover additional outpatient costs are usually 15-30% more expensive than those that cover only the costs of inpatient treatment. Therefore, they are popular among those who often go to doctors.

Health insurance policies are divided into international and local. International policies are 20-250% more expensive than local ones, depending on the insurance plan. They offer higher coverage limits for outpatient and inpatient treatment:

• for local companies, the annual coverage of stationary expenses is from 100 thousand. up to 2 million euros;
• for international companies — three times more;
• for local companies, outpatient expenses amount to an average of 5 thousand euros;
• for international — 250 thousand euros.

International policies also cover outpatient expenses outside Cyprus, so foreigners who often return to their country are advised to purchase an international health insurance policy.

Local companies provide insurance only to those who have their main place of residence in Cyprus. In case of relocation, the insurance contract with the Cypriot companies will be automatically terminated.

Private health insurance in Cyprus is tax-free

All health insurance contributions can be deducted from taxable income, provided that they do not exceed 1.5% of taxable income.

For example, if the taxable income is 30 thousand euros, then 1.5% of this amount will be 450 euros. If the annual cost of health insurance is 600 euros, 450 euros of which can be exempt from tax.

The average cost of health insurance in Cyprus depends on many factors. Before taking out medical insurance, people over the age of 50 will most likely have to undergo a medical examination (usually the examination is paid for by insurance companies).

The average cost of health insurance in Cyprus in 2023:

• local companies, for persons over 50 years old — 680-960 euros per year;
• international companies, for persons over 50 years old — 780-2900 euros per year.

The cost of services in private clinics varies. On average, you will need to pay 50 euros for an appointment with a specialist, 15-20 euros for one position in a blood test, 50-70 euros for an X—ray, and 50-100 euros for an ultrasound. One day of inpatient treatment in a private clinic will cost 200-300 euros.

7. Variety and quality of services, socio-cultural and entertainment infrastructure

The sunny climate and tax regime of Cyprus have contributed to the creation of a large and active emigrant community on the island.

Cyprus has one of the highest percentage of foreign citizens in the European Union — 19% of the total number of residents. According to Eurostat data, in 2021 the country ranked third in the ranking according to this indicator. At the same time, Cyprus is one of the few EU states where the proportion of expats from countries outside the European Union is lower than from EU countries (8% of citizens from non—EU countries, against 11% of EU citizens).

Cyprus is becoming increasingly popular among pensioners from the UK, Germany and Israel. However, according to Countrymeters, the population over the age of 64 is only 10.4%, which is significantly lower compared to other European countries such as Greece, Portugal and Italy. This creates a dynamic and young community that attracts those who want to enjoy an active and fulfilling retirement life. At the same time, it can become an obstacle for those who are looking for a more peaceful and measured life.

It is worth noting that in Cyprus, despite the developed infrastructure, there is no emphasis on specialization for the elderly. The island’s economy is focused on attracting the working-age population, which creates a diverse and dynamic community with the involvement of young professionals, families with children and those who are looking for new career opportunities in a favorable environment.

Cyprus is an island paradise with a comfortable climate and a favorable tax regime, which attracts more and more investors and expats from all over the world. It is easy to get permanent residence in Cyprus thanks to real estate investments, and the Cyprus economy is showing steady growth, creating confidence in the future.

Despite the higher cost of living compared to Greece and somewhat less convenient transport accessibility, Cyprus compensates for these disadvantages due to a high level of economic development, quality of medical services and a favorable business climate. However, it is worth noting that the government is actively working to attract qualified personnel, offering tax incentives for specialists in various fields. This makes the country attractive, primarily for young professionals and entrepreneurs looking for new business development opportunities.

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