We would like to ensure that you are still receiving content that you find useful – please confirm that you would like to continue to receive ILO newsletters.
07 September 2017
Foreign tax residents in Cyprus are exempt from taxation on their worldwide dividend and passive interest income.
On July 14 2017 Parliament approved a bill granting tax resident status to individuals who spend at least 60 days a year in Cyprus, under certain conditions.
Under the 60-day rule, which took effect on January 1 2017, an individual will be considered a Cyprus tax resident provided that he or she has satisfied either the 60-day or the 183-day rule.
According to the Income Tax Law 2002, under the 183-day rule, an individual who spends at least 183 days a year in Cyprus is considered a Cyprus tax resident. The 60-day rule aims to attract a significant number of individuals (eg, investors, entrepreneurs, digital nomads, artists, sportspeople and other businesspeople) who do not fulfil the tax residency requirements in any country. The absence of established tax residency status may leave such individuals exposed to tax authorities in other jurisdictions.
In order to become a Cyprus tax resident under the 60-day rule, the individual concerned must:
Even if an individual meets the aforementioned conditions, he or she is not considered a Cyprus tax resident if his or her business or employment in Cyprus or position in a Cyprus tax resident company has ceased.
Tax residency in Cyprus is calculated as follows:
Individuals who are Cyprus tax residents, whether under the 60-day or the 183-day rule, are taxed in Cyprus on their worldwide income. However, the following exceptions apply:
Under the 183-day rule, Cyprus tax residents are not affected by this new amendment.
Individuals who do not qualify as Cyprus tax residents under the 183-day rule now have the opportunity to consider the 60-day rule, which took effect on January 1 2017.
Individuals who can satisfy the 60-day rule should now consider registering as Cyprus tax residents and rent or buy residential property in Cyprus. Alternatively, individuals who do not satisfy the aforementioned criteria and are not subject to tax in any state should consider the possibilities of registering in Cyprus as tax residents under the 60-day rule.
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 (email@example.com). The A G Paphitis & Co website can be accessed at www.agplaw.com.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.