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Tax residence

In July 2017, the Parliament of Cyprus approved an amendment to the law on income tax which allowed those living on the island for at least 60 days a year to be granted tax resident status — this was otherwise known as the ‘183 day rule’. From now on, tax residency is granted if a person:

  • does not spend more than 183 days for the tax year in another country;
  • is not a tax resident in another country during the same year.

Compared to the tax residency rules in force in other countries, the law of the Republic of Cyprus is unique and is attractive to foreign investors and entrepreneurs.

Requirements for persons wishing to become tax resident in Cyprus:

  • stay in Cyprus for at least 60 days during the tax year;
  • do business or work for a Cypriot company that has tax residency;
  • own or rent housing in Cyprus as your permanent residence.

In the event of termination of employment or business activities in a tax year, an individual ceases to be a tax resident of Cyprus in the same year.

Rules for calculating the number of days spent in Cyprus:

  • The day of departure from the island is considered a day spent outside of Cyprus;
  • The day of arrival in Cyprus is considered a day spent in the country;
  • Arrival in Cyprus and departure on one day is considered a day spent in the country;
  • Departure from the island and return in one day is considered a day spent outside of Cyprus.

Cyprus tax residents, regardless of the status scheme («60 days rule» or «183 days rule») are subject to taxation in the Republic. In this case, the residency allows you to enjoy certain benefits:

  • individuals — residents of Cyprus who are not resident in the country are exempt from taxes on income in the form of dividends or passive interest income received in any other jurisdiction;
  • exempt from Cyprus tax and profits from the sale of securities (shares of local and foreign companies, debentures, bonds, options); the only exception is cases when the value of shares is determined by the price of real estate in Cyprus;
  • income from activities outside of Cyprus is also exempt from taxation, but on condition that this activity is carried out more than 90 days per tax year.

Individuals working in Cyprus, having an income of over 100 thousand euros per year and not having tax residency status prior to commencing their work, are subject to a preferential tax (50% discount for 10 years).

It is worth noting that all innovations are not applicable in relation to the current tax residents, who received the status according to the «rule of 183 days».