Cyprus tax resident individual by staying in Cyprus 60 days during the year

17th of July 2017

The Cyprus Parliament has amended the Income Tax Law in a way that gives the right to an individual to be considered as a Cyprus Tax Resident, provided that he/she meets cumulatively certain conditions.

Specifically, the Law has been amended so that an individual, who does not remain in any other state for one or more periods which altogether exceed 183 days in the same tax year and who is not a tax resident in any other state for
the same tax year, be considered to be a tax resident of Cyprus, provided that the following conditions are cumulatively met:

(a) he/she should remain in Cyprus for at least 60 days during the tax year;

(b) he/she should pursue any business in Cyprus and/or to work in Cyprus and/or to be a director in a company tax resident in Cyprus at any time during the tax year;

(c) he/she should maintain a permanent residence in Cyprus, which can be either owned or rented by him.

It is clarified that an individual who cumulatively fulfils the above conditions is not considered as tax resident of Cyprus in the tax year, if in that year the exercise of any business and/or employment in Cyprus and/ or the holding of a
post to a taxable person of Cyprus have ceased.

Thus, under the new provisions, an incentive is given to an individual who is not a tax resident in any other state for the same tax year to transfer his tax residence to Cyprus and to be taxed only on income from the activities the individual exercises in Cyprus.

It is noted that for employment purposes in Cyprus with earnings in excess of Euro100,000, an individual is allowed for an exemption from tax of 50% of the salary for a period of 10 years, which significantly reduces his income tax liability.

At the same time, an individual is granted exemption from income tax or defense tax on dividends and interest received either in Cyprus or abroad, provided that such individual is considered as non – domicile in Cyprus.