On 14 July 2017, the Cyprus parliament voted the amendment of Article 2 of the Income Tax Law N118 (I)/02 on the criteria for determining the rights of an individual to be considered as a Cyprus tax resident.
Prior to the amendment, a Cyprus tax resident was an individual who had remained in Cyprus for at least 183 days in one calendar year. As per the new law, the below three criteria must be met for an individual to be considered a tax resident of Cyprus:
- The individual must remain in Cyprus for at least 60 days in the tax year and must not be tax resident in any other state for the same tax year;
- The individual must carry out business in Cyprus and/or be employed in Cyprus and/or be a director in a company which is tax resident in Cyprus during the tax year of consideration; and
- The individual must maintain a permanent residence in Cyprus, which can be rented or owned.
If an individual who fulfils all the criteria, but ceases to fulfill the second criterion in the specific tax year, then that individual will not be considered a Cyprus tax resident in that specific tax year.
The total number of days of stay in Cyprus are calculated as follows:
- The day of departure from Cyprus is not considered as a day of stay in Cyprus;
- The day of arrival in Cyprus is considered as one day of stay in Cyprus;
- Arrival in Cyprus and departure from Cyprus on the same day is considered as one day of stay in Cyprus; and
- Departure from Cyprus and arrival to Cyprus on the same day is not considered as a day of stay in Cyprus.
The amendment was published on 28 July 2017 and will be effective retroactively as from 1 January 2017, ie as from tax year 2017 (the tax year in Cyprus being the calendar year).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.