The Parliament of Cyprus recently passed a bill amending the rules for determining the tax residency of individuals in the Republic, thus offering the opportunity to claim tax residence status in Cyprus without spending 183 days in Cyprus in a given tax year, which runs from 1st January – 31st December.
Subsequently, an individual may be determined as a Cyprus tax resident where he does not remain in another state in excess of a 183-day period, within the same year of assessment and does not fulfil any other criteria of tax residence in that or any other state.
The Cyprus residency criteria is met if an individual:
- Remains in Cyprus for at least 60 days during a tax year
- Carries out any business in Cyprus and/or is employed in Cyprus and/or holds an office to a person resident in Cyprus at any time during the year of assessment
- Maintains a permanent residence in Cyprus, which can either be owned or rented by him
It is clarified that an individual who cumulatively fulfils the above conditions is not considered a tax resident of Cyprus in a tax year, if in that year, the exercise of any business or employment in Cyprus and/or the holding of a post to a taxable person of the Republic have ceased.
For the purpose of calculating the days of stay in Cyprus, the bill also offers clarification for transit purposes:
- The day of departure from Cyprus is considered as a day outside 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 counted as one day in Cyprus
- Departure from Cyprus and return to Cyprus within the same day is counted as one day outside Cyprus
The given criteria look to further enhance the attraction of Cyprus as the jurisdiction of choice for individuals looking to benefit from the Republic’s non-domicile regime, which was introduced in July 2015 and offers tax exemptions on such income as dividends, interest or rents, where an individual has not been tax resident in Cyprus during 17 out of the last 20 years, as per the provisions of the Wills and Succession Law Cap. 195.
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