Malta vs Cyprus

[GrumpyMess]

It seems that there are not so many options left for a favorable tax residency in Europe. This is especially true for digital nomads. I want to compare these 2 countries, because I do not see other options. And taking into account the tightening of rules in Dubai, these countries are even more attractive. The goal is to pay as little tax as possible and keep things simple while not spending too much time in a shithole. These are my observations and perhaps some are not true.

Both countries have the same standard of living and spending. A decent apartment will cost about 1500 euros per month, but just a room or bed for a formal address requirement about 400. Tax offices in both countries are quite relaxed in relation to non-dom foreigners. Both countries have full access to the EU market. Now on to the differences:

Cyprus:
The island is larger, more interesting places, more comfortable for a long living, which makes sense if a tax residence certificate is required. Cyprus is not in a Schengen area and pretending that you live there is more difficult. Strict rules for residence, so you will have to prove economic interest in Cyprus by being self employed or registering a company.

Cyprus does not tax capital gains, but to get a zero rate on other type of income an offshore company is needed. It's a kind of gray zone, but there's no other option. For dividends it's 2.65% tax anyway.

Difficulties with the withdrawal of cryptocurrency without tax. The only option is to cash out to an offshore company which adds an unnecessary burden. I suspect that this method is extremely complicated now.

Malta:
The island is smaller, dirtier and has less entertainment, but Malta is in the Schengen area and this opens the way to pretend as living there a most of the year. It is much easier to get a residence for self-sufficient EU national. Less requirements. You don't need to register a company. Malta is more digitalized.

Malta has a remittance basis regime with 5000 only tax. You can perform any operations outside of the Malta in your name and not be afraid of taxes. The withdrawal of cryptocurrencies in this case is much easier.

Malta has invented a non-dom regime, so it is more likely that there will be no problems in the future.

All this makes Malta more attractive for me, but I'm interested in your opinion. Maybe some tips. Perhaps I didn't take into account something.

 

[Sols]

Both countries have the same standard of living and spending. A decent apartment will cost about 1500 euros per month, but just a room or bed for a formal address requirement about 400.

You can get entire villas in Cyprus for 1,500 EUR/month if you don't mind living a bit outside of the city centers. Can't get that in Malta. What you can get in Malta, though, are houses of character and town houses with a distinct Maltese style. If these are things that matter you, that is.

The island is larger, more interesting places, more comfortable for a long living, which makes sense if a tax residence certificate is required. Cyprus is not in a Schengen area and pretending that you live there is more difficult. Strict rules for residence, so you will have to prove economic interest in Cyprus by being self employed or registering a company.

Cyprus does not tax capital gains, but to get a zero rate on other type of income an offshore company is needed. It's a kind of gray zone, but there's no other option. For dividends it's 2.65% tax anyway.

This is a case of right answer but wrong method of getting to the answer.

The corporate income tax is 12.50%. If you pay yourself dividends, you pay no SDC (Special Defense Contribution) which is similar to a capital gains tax, if you are a non-domiciled resident (i.e. a foreigner or someone who hasn't lived in Cyprus for 17 years), which you can be for a period of 17 years. The amount you pay yourself is taxable at 2.65% up to a maximum if around 4,800 EUR/year.

Malta:
The island is smaller, dirtier and has less entertainment, but Malta is in the Schengen area and this opens the way to pretend as living there a most of the year.

The only thing I would disagree with here is that Malta has "less entertainment". Of course it depends on what you mean by entertainment, but Malta is much more fun than Cyprus if you're into bars, clubbing, restaurants, and that kind of going out. Aside from Ayia Napa (in summer only) and parts of Limassol, Cyprus is not very entertaining. But if your idea of entertainment is walking in nature, skiing, and driving around/exploring the island, Cyprus is the better choice.

If your idea of entertainment include museums, concerts, and events and that's something you value highly, both are bad choices.

Perhaps I didn't take into account something.

Have you spent time in both? You're almost just splitting hairs on taxes and it starts coming down to personal preferences.

 

[GrumpyMess]

You can get entire villas in Cyprus for 1,500 EUR/month if you don't mind living a bit outside of the city centers. Can't get that in Malta. What you can get in Malta, though, are houses of character and town houses with a distinct Maltese style. If these are things that matter you, that is.

I've compared by using numbeo, for 1 bedroom apartment it's 1,031 in Limassol and 831 in Valletta.

The corporate income tax is 12.50%. If you pay yourself dividends, you pay no SDC (Special Defense Contribution) which is similar to a capital gains tax, if you are a non-domiciled resident (i.e. a foreigner or someone who hasn't lived in Cyprus for 17 years), which you can be for a period of 17 years. The amount you pay yourself is taxable at 2.65% up to a maximum if around 4,800 EUR/year.

I see no benefit of using a typical Cyprus company and paying 12.5 tax if you can register as self employed to fulfill the formal ties requirement and work through an offshore company. But there are many ambiguities for this method. Again I see no easy option to cash out crypto even by using cyprus company in a easy way.

Have you spent time in both? You're almost just splitting hairs on taxes and it starts coming down to personal preferences.

Spent time only in Cyprus. Of course, it's better to spend time in both countries in order to draw full conclusions.
None of these countries are where I would like to stay forever, so I'd like to choose the more acceptable one.

 

[Sols]

I've compared by using numbeo, for 1 bedroom apartment it's 1,031 in Limassol and 831 in Valletta.

Numbeo is OK for high level research but when it comes down to decision time, you need some accurate data. To see what the market is really like, check Bazaraki for Cyprus and major real estate agents for Malta (Frank Salt, Dhalia, Perry, Remax).

For example, hardly anyone lives in Valletta. You should probably be comparing Msida, Gzira, Sliema, or St Julian instead, as that's where you're most likely to end up living if you're a freshly arrived expat. Swieqi and San Gwann are also becoming more popular as Sliema and Saint Julian become too expensive for people.

Limassol is by far the most expensive city in Cyprus. Costs of living are lower in Larnaca, Paphos, and Nicosia. Costs of living are lower even just outside of Limassol.

I see no benefit of using a typical Cyprus company and paying 12.5 tax if you can register as self employed to fulfill the formal ties requirement and work through an offshore company. But there are many ambiguities for this method. Again I see no easy option to cash out crypto even by using cyprus company in a easy way.

Depends on your income level and nature of your income. It also depends on what you mean by cashing out crypto. If someone is paying your invoices in crypto, there's normally no extra tax burden for converting that crypto to fiat and declaring that fiat as income/profit. But if you're trading crypto professionally, there's other tax scope to consider.

In either case, if you register as self employed, you're paying normal income tax. No non-dom exemption applies there, although there are some 20-50% tax discount incentives for some types of roles and for first-timers.

For normal income, the first 19,500 EUR/year is not taxed. After that, taxes start at 20% and go up to 35%. You can probably take away 50% of that and compare it against 12.50% CIT plus 2.65% GHS (capped at 4,800 EUR) and see where what works our best for you.

Of course, it's well documented that people live in Cyprus (and Malta) and do their business through offshore companies to avoid paying CIT. It's not technically legal but enforcement is basically non-existent.

 

[Dandyline]

All this makes Malta more attractive for me, but I'm interested in your opinion. Maybe some tips. Perhaps I didn't take into account something.

The only thing that could make Malta more attractive is the Schengen part, so you can travel and stay under the radar and don't need to spend any time there. I assume Cyprus is more livable though, and the banking options might be better with a Cyprus residency compared to Malta.

 

[GrumpyMess]

and the banking options might be better with a Cyprus residency compared to Malta

I don't think this would be a big problem in the case of a personal account. It's part of the EU anyway.

so you can travel and stay under the radar and don't need to spend any time there

It would hardly be possible to not spend any time there at all. But I don't mind spending a month or two there.

 

[10101]

The only thing that could make Malta more attractive is the Schengen part, so you can travel and stay under the radar and don't need to spend any time there. I assume Cyprus is more livable though, and the banking options might be better with a Cyprus residency compared to Malta.

Could you explain this? You will lose you tax residency if you you're under 183 days in the country. There are flight logs & data is schengen-wide collected. Money traces can also reveal that you were under 183D in the country.

 

[zaybxc]

Strict rules for residence, so you will have to prove economic interest in Cyprus by being self employed or registering a company.

Some time ago I spoke to a Cypriot accountant who told me that it's quite straightforward to get a certificate of residence if you are a EU citizen: rent an apartment, bank statement showing enough money (50k+ euro) and health insurance.
No need of being self employed or registering a company.

 

[Dandyline]

Could you explain this? You will lose you tax residency if you you're under 183 days in the country. There are flight logs & data is schengen-wide collected. Money traces can also reveal that you were under 183D in the country.

Access to flight logs is restricted to investigations of serious crimes and cannot be used to monitor the duration of someone's stay in the country. Additionally, the details are only retained for six months in compliance with GDPR regulations.

https://www.consilium.europa.eu/en/policies/fight-against-terrorism/passenger-name-record/
Regarding money traces, you can find someone in Malta, provide a card for the person to spend 500 EUR/month on various daily spendings in Malta to show spendings on your bank statement. For your own spendings in other countries, you use no-name CC and/or cash. Thats overkill though.

You can of course also have automatic timers to turn on/off lights, water so show some movements on your utility bills. All pretty simple.

Generally, there won't be any inquiries as long as you rent an apartment and fulfill the other basic substance. It all depends on your situation and what your goal is.

I don't think this would be a big problem in the case of a personal account. It's part of the EU anyway.

Personal accounts is never an issue, im talking about business accounts and PSPs... It depends on your business, if it's some simple consulting, it's super easy.

 

[CyprusLaw]

Some time ago I spoke to a Cypriot accountant who told me that it's quite straightforward to get a certificate of residence if you are a EU citizen: rent an apartment, bank statement showing enough money (50k+ euro) and health insurance.
No need of being self employed or registering a company.

In order to get the TRC you need to provided evidence that you've spent 183 days in Cyprus (if you are going with the 183 days route), these includes bank statements, showing movement, a signed sheet documenting each day of the year, flight tickets etc. So it's easy as long as you actually spent 183 days in Cyprus.

If you go for the 60-days route then you need to either be self employed or have a company which company has to show movement, it cannot just be a sham company.

Numbeo is OK for high level research but when it comes down to decision time, you need some accurate data. To see what the market is really like, check Bazaraki for Cyprus and major real estate agents for Malta (Frank Salt, Dhalia, Perry, Remax).

For example, hardly anyone lives in Valletta. You should probably be comparing Msida, Gzira, Sliema, or St Julian instead, as that's where you're most likely to end up living if you're a freshly arrived expat. Swieqi and San Gwann are also becoming more popular as Sliema and Saint Julian become too expensive for people.

Limassol is by far the most expensive city in Cyprus. Costs of living are lower in Larnaca, Paphos, and Nicosia. Costs of living are lower even just outside of Limassol.


Depends on your income level and nature of your income. It also depends on what you mean by cashing out crypto. If someone is paying your invoices in crypto, there's normally no extra tax burden for converting that crypto to fiat and declaring that fiat as income/profit. But if you're trading crypto professionally, there's other tax scope to consider.

In either case, if you register as self employed, you're paying normal income tax. No non-dom exemption applies there, although there are some 20-50% tax discount incentives for some types of roles and for first-timers.

For normal income, the first 19,500 EUR/year is not taxed. After that, taxes start at 20% and go up to 35%. You can probably take away 50% of that and compare it against 12.50% CIT plus 2.65% GHS (capped at 4,800 EUR) and see where what works our best for you.

Of course, it's well documented that people live in Cyprus (and Malta) and do their business through offshore companies to avoid paying CIT. It's not technically legal but enforcement is basically non-existent.

As a self-employed individual he would also have to pay social insurance which increased as of 1/1/2024 and is now around 17-18%.

 

[zaybxc]

In order to get the TRC you need to provided evidence that you've spent 183 days in Cyprus (if you are going with the 183 days route), these includes bank statements, showing movement, a signed sheet documenting each day of the year, flight tickets etc. So it's easy as long as you actually spent 183 days in Cyprus.

If you go for the 60-days route then you need to either be self employed or have a company which company has to show movement, it cannot just be a sham company.

Ok, I see... I was confusing the TRC (Tax Residence Certificate) with the Yellow Slip.

 

[CyprusLaw]

Ok, I see... I was confusing the TRC (Tax Residence Certificate) with the Yellow Slip.

Noted - yes the yellow slip is quite straightforward to get.

 

[koohl]

The goal is to pay as little tax as possible and keep things simple while not spending too much time in a shithole. These are my observations and perhaps some are not true.

If that is your goal I would choose Cyprus.

 

[GrumpyMess]

Access to flight logs is restricted to investigations of serious crimes and cannot be used to monitor the duration of someone's stay in the country. Additionally, the details are only retained for six months in compliance with GDPR regulations.

There is DAC7 now and they get automated report from Platform Operators

Generally, there won't be any inquiries as long as you rent an apartment and fulfill the other basic substance. It all depends on your situation and what your goal is.

When you apply for a trc certificate, there is a pretty extensive list of what you need to provide. On the other hand there is no obligation to report any overseas income or declaring assets as opposed to Cyprus, just pay 5000 and no one bothers you.

If that is your goal I would choose Cyprus.

What's wrong with Malta in your opinion?

 

[Dandyline]

There is DAC7 now and they get automated report from Platform Operators


When you apply for a trc certificate, there is a pretty extensive list of what you need to provide. On the other hand there is no obligation to report any overseas income or declaring assets as opposed to Cyprus, just pay 5000 and no one bothers you.


What's wrong with Malta in your opinion?

Yes probably Rental contract, CC statements and utilities, at most.

DAC7 has nothing to do with flight logs. DAC7 Is reporting of income from platforms.

 

[TRGali]

but Malta is in the Schengen area and this opens the way to pretend as living there a most of the year

I read here in the section about "drawbacks for Malta" : Malta: tax and residency requirements (2024)

• Staying 183 days in Malta may displease users, and it is not a flexible limitation as the police conscientiously control the exits and entrances of freelancers.

Have you checked how it is on the ground ?

 

[JimBeam]

Sols answered most of the Cyprus related thigs.
I would just like to add couple of comments.

A decent apartment will cost about 1500 euros per month, but just a room or bed for a formal address requirement about 400.

Good luck finding anything on Malta for 400 (especially if you want to spend 181 days in it). Real Estate in Cyprus is generally more affordable and the offer to rent or buy is also much bigger compared to Malta.

You can get entire villas in Cyprus for 1,500 EUR/month if you don't mind living a bit outside of the city centers. Can't get that in Malta. What you can get in Malta, though, are houses of character and town houses with a distinct Maltese style. If these are things that matter you, that is.

Correct! And these houses of character are quite expensive and the there isn't many of them in the market.

I've compared by using numbeo, for 1 bedroom apartment it's 1,031 in Limassol and 831 in Valletta.

Rarely any foreigner stays in Valetta. Better compare Sliema, Gzira or St Julian as these are the locations where expats mostly stay. (as Sols wrote)

Cyprus is not in a Schengen area and pretending that you live there is more difficult

From what I have read - they are working on it as we speak as they figured out it will add more value to their property by investment program as then you could move across the whole EU simply by buying a 300k property in Cyprus. It will be the cheapest ticket to EU. So I guess Cyprus will be a part of Schengen anytime soon (within a year or two) unless Brussels put stop sign on it (for obvious reasons).

The island is smaller, dirtier and has less entertainment

It's much smaller and dirtier but I guess that there is more entertainment in Malta as there are more younger people on the island. Cyprus is kind of only for old(er) folks living off their capital (retired people). For Malta keyword is "Paceville" for Cyprus keyword is "Toga Toga" LOL

Malta has a remittance basis regime with 5000 only tax. You can perform any operations outside of the Malta in your name and not be afraid of taxes. The withdrawal of cryptocurrencies in this case is much easier.

Yes, but "only" 5k is about 200k cash in your pocket in Cyprus compared to only ~35k in Malta. And since it's capped to about 5k all above is tax free while in Malta after that you're taxed at 35%.
It also depends from the source of money. If these are dividends or any income from capital - Cyprus wins. If it's from an active business - it's a bit difficult comparison then.

 

[Serni]

Did you check Madeira/Portugal?

 

[GrumpyMess]

Good luck finding anything on Malta for 400 (especially if you want to spend 181 days in it). Real Estate in Cyprus is generally more affordable and the offer to rent or buy is also much bigger compared to Malta.

400 option is just to show ties to Malta/Cyprus, I'm not gonna live there. But I abandoned this option and simply looking for affordable housing. And I don’t see that Cyprus would be cheaper, especially if we consider Limassol.

Better compare Sliema, Gzira or St Julian as these are the locations where expats mostly stay. (as Sols wrote)

That's what I did now, the difference is small. I understand that Malta is more expensive than Cyprus. But in my opinion the standard of living is also higher. I can't say much until I visit it.

Yes, but "only" 5k is about 200k cash in your pocket in Cyprus compared to only ~35k in Malta. And since it's capped to about 5k all above is tax free while in Malta after that you're taxed at 35%.
It also depends from the source of money. If these are dividends or any income from capital - Cyprus wins. If it's from an active business - it's a bit difficult comparison then.

Let's get into this. The majority is capital gains. But we will also consider active business. In case of Cyprus you mean an offshore company IIUC, no other way to get such a tax rate.

In Malta there'll be no 35% since no money above 35k will be remitted into the country.
I suspect that for active business it's possible to use a foreign Limited partnership and avoid complex and expensive corporate structures.

Did you check Madeira/Portugal?

I don't see any advantages over these 2 options I listed

 

[JimBeam]

400 option is just to show ties to Malta/Cyprus, I'm not gonna live there. But I abandoned this option and simply looking for affordable housing. And I don’t see that Cyprus would be cheaper, especially if we consider Limassol.

In Cyprus you've got options to live in the country side where you can find rentals for less money. That's not really an option in Malta. It is on Gozo but there's not much happening and it won't be that cheaper.

That's what I did now, the difference is small. I understand that Malta is more expensive than Cyprus. But in my opinion the standard of living is also higher. I can't say much until I visit it.

Flats in Valletta are mostly very old (couple hundred years old). There are basically no new buildings in Valletta. Those that are available for rent are renovated and prices are quite high and are mostly rented to tourist as short-term rentals. Also, as mentioned earlier - expats just don't live there.

In Malta there'll be no 35% since no money above 35k will be remitted into the country.

Correct, but what if after a couple of years you decide to buy a property there? Or to buy a nice car?
You can't do that with 3k/month where the rent 1.200/month + 416 tax (5k/12) take you more than half of the money.