Significant reform of Cyprus' tax residency rules
Following unanimous parliamentary approval of the relevant bill on 14 July 2017, the current 183-day rule is being replaced with a triple criterion, all parts of which must be satisfied in order to qualify for Cyprus residency.
The individual must:
- remain in Cyprus for at least 60 days in the relevant year of assessment;
- conduct a business or be employed in Cyprus, or 'hold an office to a person resident in Cyprus' at any time during the year of assessment; and
- maintain a permanent residence in Cyprus that he or she owns or rents.
However, it is also necessary that the individual is not a tax resident in any other state, and does not remain in another state for 183 days or more in the same year of assessment.
Individuals who are Cyprus tax resident but are not domiciled in Cyprus are exempt from the special defence contribution levied on dividends, interest, and rental income. They will also be entitled to special income tax exemptions for five years, or ten years where annual employment income exceeds EUR100,000.
The law is expected to enter into force on 1 January 2018. It has not yet been gazetted due to some clarifications requested by the parliament, but is expected to be published shortly.
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