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Obtain Cyprus Tax Residency by only staying 60 days in Cyprus

Cyprus “tax resident”

 In accordance with section 2 of the Income Tax Law, a “resident of the Republic” is an individual who stays in the Republic for one or more periods exceeding in aggregate 183 days in the tax year.

On 14 July 2017, an amendment to the Income Tax Law was unanimously voted by the Parliament. In accordance with the amended law, the definition of a “resident of the Republic” is further widened and now also includes an individual who does not stay in any other country for one or more periods exceeding in aggregate 183 days in the tax year and is not tax resident in any other country during that year, provided that certain conditions are cumulatively fulfilled.

The amending Law has been published in the Official Gazette on 28 July 2017, and new provisions are applicable as from 1 January 2017, therefore individuals willing to take advantage of it, can act so from current year.

The preconditions

All of the following criteria must be met by an applicant:

  1. The individual stays in the Republic for at least sixty (60) days in the tax year;
  2. Exercises any business in the Republic and/or is employed in the Republic and/or holds an office with a Cyprus tax resident person at any time during the tax year;
  3. Maintains a permanent home in the Republic, which is owned or leased by the individual.

Anti-abuse provision clarifies that an individual who cumulatively fulfils the above conditions is not considered as resident of the Republic in the tax year, if in that year the exercise of any business and/or employment in Cyprus and/or the holding of an office with a taxable person of Cyprus have ceased.

Calculating the days of stay in the Republic

 For the purposes of calculating the days of stay in the Republic:

  • The day of departure is a day outside the Republic.
  • The day of arrival is a day in the Republic.
  • Arrival and departure from the Republic in the same day is a day in the Republic.
  • Departure and arrival in the Republic in the same day is a day outside the Republic.

The rules on taxation in Cyprus of tax resident non-domiciled individuals also apply to non-domiciled individuals who are tax resident under the “60 day rule”.

 What are the benefits for an individual that chooses to become Cyprus tax resident?

Exemption from special defence contribution tax which is levied on dividends, interest, and rental income for all those individuals that tax resident in Cyprus but are not domiciled in Cyprus.

Tax exemption of 50% for those whose income exceeds €100.000 per annum. This is applicable for 10 years.