New Cyprus Tax Residency Law – Cyprus tax residency in 60 days

The Cyprus government has recently introduced a law that grants individuals the opportunity to become Cyprus tax residents under the condition that they fulfil certain prerequisites.

The Income Tax legislation through the new law will be amended so that an individual, who does not physically reside in a country for more than 183 days during a tax year and is not a tax resident in another country during a tax year, may be deemed as a Cyprus tax resident given that the individual cumulatively fulfils the following requirements:

  • Stay in Cyprus for 60 days or more during the same tax year;
  • Set up any business in Cyprus; and/or the individual should work in Cyprus; and/or the individual can be a director in a Cyprus tax resident company at any period during the tax year;
  • Either rent or own a permanent residence in Cyprus.

It is important to note that an individual who meets the aforementioned conditions is considered a Cyprus tax resident within the same tax year provided that the exercise of the business, employment or holding of a post in a Cyprus Company has not ceased.

Calculating the days an individual stays in Cyprus:

  • The day an individual departs from Cyprus is viewed as a day outside Cyprus;
  • The day an individual arrives to Cyprus is regarded as a day he/she stays in Cyprus;
  • When an individual arrives and departs from Cyprus on the same day it is viewed as a day in Cyprus;
  • When an individual departs from and arrives to Cyprus on the same day it is viewed as a day outside Cyprus.

To sum up, the new provisions provide to individuals with an incentive to become Cyprus tax residents and be subject to Cyprus Income Tax, under the non-domicile regime.

It is worth mentioning that Cyprus tax residents who earn over 100,000 Euros due to their employment are granted a 50% tax exemption on their salary for a decade. This exemption decreases their income tax considerably. Finally, a non-domicile Cyprus tax resident is also exempted from defence or income tax on interest and dividends generated from within Cyprus or abroad.

The law is expected to come into force on 1st January 2018.

Should you require a professional guidance and advise on the above please do not hesitate to contact us at solutions@oxfordcy.com.