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01 June 2017
Concept of domicile
Determining tax residency and domicile status
Providing high-net-worth individuals with further incentives to relocate to Cyprus is one of the objectives of the non-domicile rules, the so-called 'non-dom' rules, which came into force on July 17 2015 on their publication in the Official Gazette.
Previously, a distinction was made between non-tax residents and tax residents:
In order to provide high-net-worth individuals with additional incentives to relocate to Cyprus or continue conducting their business operations or investments in Cyprus, the government introduced the concept of 'domicile' for the purposes of the Special Defence Contribution Tax Law. As a result, an individual may be resident, but not domiciled, in Cyprus. Tax residents who are not domiciled in Cyprus are exempted from the special defence contribution tax.
The concept of 'domicile' already existed under Cypriot legislation by way of the Wills and Succession Law, in which it was used to determine which jurisdiction should govern the succession of a deceased person.
The concept of domicile is distinct from the concepts of residence, nationality or citizenship; a person can have only one domicile at any given time.
The law distinguishes between:
According to the non-dom rules, a person is deemed to be domiciled in Cyprus:
Tax residency and domicile status can be determined using the following criteria.
An applicant who has spent 183 days during a particular calendar year in Cyprus is considered to be tax resident. The day of arrival is counted in the residency period and the day of departure counts towards the non-residency period.
As regards domicile, applicants must answer the following questions:
If an applicant answers no to all questions, he or she is not domiciled in Cyprus.
Applicants can also use the following flowchart to determine their tax residency and domicile status for a particular tax year.
For further information on this topic please contact Angelos Paphitis at A G Paphitis & Co by telephone (+357 25 73 10 00) or by email (firstname.lastname@example.org). The A G Paphitis & Co website can be accessed at www.agplaw.com.
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