Cyprus Tax Residency & Non-Dom Rules

In accordance with Cyprus law, a company is considered to be tax resident in Cyprus and thus in a position to avail itself of the favourate Cyprus tax Regime, if its “management and control” is situated in Cyprus. There is no express definition of the term “management and control” in Cypriot legislation, however, a series of Court Decisions explain that the term in practice signifies the ultimate level of policy decision making or superior control within the company (e.g. board of directors).

As a result, for effectively maintaining the “management and control” of the company in Cyprus, thus establishing its tax residency in Cyprus, the following measures and recommendations must be followed:

The above are just some of the measures which should be followed in order to better combat any possible challenges from an operational management perspective.

Under Cyprus Tax Law, if a company has no activities in Cyprus and the management and control is not in Cyprus (non-resident Directors) nor does the company have an office or activities in Cyprus, then the company when preparing its accounts and tax returns will state that it is not resident. In this case the company does not pay any taxes nor does it have to register for VAT – in fact it cannot register for VAT.

In addition the company will not be able to obtain a tax residency certificate from the tax authorities should the company need any proof of residence in Cyprus.
Furthermore, it is not necessary for such company to prove to the authorities in Cyprus that the company is paying taxes in another country so that it is considered non-resident.

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