Cyprus offers various of personal tax incentives for foreigners and high net worth individuals relocating to Cyprus, such as zero tax on dividends, tax exemption on capital gain from sale of shares and many more.
However, to enjoy these benefits, the individual must become a Cyprus tax resident.
Until 2017, an individual was considered as a Cyprus tax resident if he or she had spent more than 183 days in Cyprus during a tax year.
As a result, if an individual spent less than 183 days in Cyprus during a tax year, the individual would not have been considered as a tax resident.
The Tax Law has been amended from 2017, to allow an individual who spends a minimum of 60 days in Cyprus in a tax year to become tax resident for the same year, provided certain conditions are satisfied. This is the “60-day rule”.
The conditions that must be satisfied are:
- Does not stay in another country for one or more periods exceeding 183 days
- Is not a tax resident in another country for the same tax year
- Carries on a business in Cyprus or is employed in Cyprus or holds an office in a Cyprus tax resident company at any time during the tax year
- Maintains a permanent residence in Cyprus, either owned or rented
The Tax Law was further amended to clarify that an individual who fits all the conditions under the ’60-day rule’ would not be considered as a tax resident if their business, employment, or office holding position has been terminated during that year.
It was recently clarified through a circular issued by the Tax Department, that individuals who are claiming tax residency in Cyprus based on the 60-day rule for a tax year, but at the same time are considered as a tax resident in countries that their tax year differs from that of Cyprus, that the condition (2) above is not violated. This is subject to approval from the Cyprus Tax Commissioner.
To determine the days in Cyprus, the Income Tax Law states that:
- A day of departure from Cyprus is a day out of Cyprus
- A day of arrival into Cyprus is a day in Cyprus
- Arrival into Cyprus and departure from Cyprus on the same day is a day in Cyprus
- Departure from Cyprus and return to Cyprus on the same day is a day out of Cyprus.
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- What company structure suits you best,
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If you want to work with professionals who provide exceptional quality standards of services in Cyprus, the simplest way is to fill in the contact form below.
We will take you through a step by step process from A to Z in creating the perfect business structure in Cyprus.
Can’t wait any longer? Become even more successful by working with accountants you can count on and be among the thousands business that already did.