Cyprus Tax Residency for Physical Persons

How can you be qualified as a Cyprus Tax Resident?
On 14 July 2017, the Cyprus parliament voted for a Cyprus tax law amendment adding a second test –the “60 day rule” – for the purposes of determining Cyprus tax residency for individuals.
Therefore you can now be considered as being a Cyprus tax resident provided that you either satisfy the “60 day rule” or the “183 day rule”.
Under the “183 day rule”, you need to spend at least 183 days a year in Cyprus, whereas under the “60 day rule” you should meet the below criteria.

How to become Cyprus Tax Resident under the 60-day rule?
You should meet the following criteria, for each fiscal year:
• Remain in Cyprus for at least 60 days during the tax year in question; and
• Not reside in any other single state for a period exceeding 183 days, and
• Not be tax resident in any other state; and
• Carry out business activities in Cyprus and/or work in Cyprus and/or be a director in a company that is tax resident in Cyprus at any time of the tax year in question; and
• Maintain a permanent residence in Cyprus (either owned or rented).

How to calculate the days of residency in Cyprus?
• The day of departure from Cyprus is considered as a day outside of Cyprus;
• The day of arrival in Cyprus is considered as a day in Cyprus;
• Arrival in Cyprus and departure from Cyprus within the same day is considered as one day in Cyprus;
• Departure from Cyprus and return to Cyprus within the same day is considered as one day outside of Cyprus.

What are the applicable tax benefits?
• A Cyprus tax resident individual but non-domiciled in Cyprus is exempt in Cyprus from taxation on his/her worldwide dividend and ‘passive’ interest income.
• Profit from the sale of securities is exempt from tax in Cyprus.
• An individual who will be employed in Cyprus and his/her income will exceed €100.000, and, provided that he/she has not been a tax resident of Cyprus prior to the commencement of his/her employment in Cyprus, he/she will enjoy a 50% discount on his/her income tax in Cyprus, for a period of 10 years.
• Income from employment carried out outside Cyprus is exempted from Cyprus income tax, provided that the employment exercised outside Cyprus exceeds 90 days per tax year.

The content of this article is intended to provide a general guide to the subject matter and does not constitute legal advice.

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