Cyprus tax residency in 60 days

Posted on 15 Nov 2017, by Arthouros Kiourtzides

On the strength of the parliamentary resolution of the Cyprus House of Representatives, on the 14th July 2017, the rule of 183 days, as regards the determination of tax residency of individual persons in Cyprus, was amended by adding a supplementary rule.

In particular, an individual person has the opportunity, if he/she fulfill the following criteria (for each fiscal year), to fall under the new regulations of the Cyprus tax residency:

  •  In the first place, the person concerned should primarily be resident in the Republic of Cyprus for a continuous or aggregate period of at least 60 days during the year of assessment. Moreover, the person concerned should not be a taxpayer of any other country and/or not reside in another jurisdiction for more than 183 days during the fiscal year in question.
  •  He should conduct business in Cyprus and/or hold a position in a Cypriot company (the company must be a tax resident of Cyprus) and/or he must be employed in Cyprus.
  •  He must maintain a permanent place of residence in Cyprus, as a tenant or owner.

In addition, the new regulation provides for the possibility of exempting the individual persons who conduct business in Cyprus from income tax of 50% of their remuneration for the next 10 years, on the assumption that they will acquire the tax residency in Cyprus for the first time, they are not permanent residents in Cyprus, and their annual earnings are €100,000 or above.

It is therefore provided that an individual person during any fiscal year who does not have a tax residency anywhere else, will be taxed in Cyprus on the revenue arising from his activity in Cyprus.

It is worth noting that a person who has never been a tax resident and/or permanent resident in Cyprus for the past 20 years (before 2015), since he is acquiring tax residency in Cyprus under the applicable law, will enjoy a favourable tax arrangement. In particular, income from interest, and income from dividends from shares, both inside and outside the Republic of Cyprus, is not subject to taxation.

With the exception of the source of the above revenues (and some additional exemptions) an individual person who is a tax resident in Cyprus will be taxed on any other worldwide income, based on the following income tax rate:

Revenue                                             Tax rate (%)

Up to €19,500                                   0%

€19,501 - €28,000                            20%

€28,001 - €36,300                            25%

€36,301 - €60,000                            30%

More than €60,000                         35%

The purpose of this present article is to provide a general update on this issue. For more specialized advice and detailed information please contact Arthouros Kiourtzides arthouros@kyprianou.com.cy