Cyprus tax system is one of the most favorable in Europe, offering a variety of tax benefits to physical persons who have tax residence in Cyprus.
A physical person is considered to be a tax resident in Cyprus for a calendar year, if the criteria of the 183- or 60-day rule are met.
The 183-day rule: Where the person resides in Cyprus for more than 183 days (in one calendar year).
The 60-day rule: Where the person resides in Cyprus for at least 60 days (in one calendar year – after the 1st January 2017). The following conditions need to be fulfilled. The person must:
For purposes of calculating the days present in Cyprus:
Obtaining a Tax Residence Certificate
Tax residence certificates for physical persons can be issued by Cyprus Tax authorities.
Tax residence certificates are usually requested by foreign tax authorities, in order to apply for a double tax treaty with Cyprus (i.e. applying lower withholding tax on payment to Cyprus residents) and/or to confirm that the individual is actually residing in Cyprus.
Obtaining a Tax Residence certificate under the 183-day rule
Be registered with the Tax Authorities and have a Tax Identification Code;
Obtaining a Tax Residence certificate under the 60-day rule
The following conditions must be fulfilled:
The person can request a Cyprus tax residence certificate, from Tax Authorities, provided that certain conditions and documentation are in place.
The certificate can be requested either for the previous year or for the current year.
Certificate for the previous year
The conditions stated above, as per the 183- or 60-day rule need to be met.
Certificate for current year
Tax Authorities can issue tax residence certificates for the current year, despite the fact that the necessary days did not lapse, as per the 183- or 60-day rule. Certain conditions must be met and certain evidence must be presented to the Tax Authorities, proving the intention of the individual to remain in Cyprus.
Such certificates are issued only in circumstances where the individuals request the certificate for the purpose of a reduced or eliminated foreign withholding tax from dividends or interest earned.
The issuance of a certificate from the Tax authorities imposes stamp duty of €80,00.
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