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Cyprus Tax Update

Karlos Zangoulos, Managing Partner, Head of Tax |

17 July 2017

On Friday 14 July the Parliament of Cyprus unanimously approved a bill that gives the right to an individual who spends more than 60 days in Cyprus to be considered as tax resident in Cyprus, provided that he meets cumulatively certain conditions. 

The Income Tax Law has been amended so that an individual meeting the following criteria is considered to be a tax resident of Cyprus: 

  • he should remain in Cyprus for at least 60 days during the tax (calendar) year;  and
  • he should maintain a permanent residence in Cyprus, which can be either owned or rented by him; and
  • he should not be a tax resident of any other State or remain in any other State for a period or periods exceeding 183 days in respect of any year he claims Cyprus tax residency.
  • he should exercise business in Cyprus or have employment in Cyprus or be a director in a company resident in Cyprus at any time during the tax year and such business, directorship or employment should continue to exist at the end of the year in which Cyprus residency is claimed. 

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

  • 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.

Thus, under the new provisions, an incentive is given to an individual who is not a tax resident in any other state for the same tax year to transfer his tax residence to Cyprus and to be taxed only on income from the activities the individual exercises in Cyprus. Other significant advantages for persons to consider when moving to Cyprus include:

  • The non-dom regime that exempts from taxation dividends and interest earned by persons who are not Cyprus domiciled for a period of 17 years after becoming Cyprus tax resident.
  • 50% of the salary of individuals earning in excess of Euro 100,000 p.a. are granted an exemption from tax for a period of 10 years from the year following the year in which they become Cyprus tax resident.