Cyprus Tax Residency
For tax purposes, an individual is considered to be a Cyprus tax resident if he/she is physically present in Cyprus for more than 183 days in a calendar year.
Alternatively, as of 1st January 2017, under the ‘60-day rule’, an individual can be considered as a Cyprus tax resident provided that he/she does not spend more than a total of 183 days in any State within a tax year and is not a tax resident of another State within the same tax year and satisfies the following three conditions:
(i) the individual stays in Cyprus for at least 60 days in the tax year,
(ii) exercises a business and/or is employed in Cyprus and/or holds an office with a Cyprus tax resident company at any time during the tax year,
(iii) maintains (by owning or leasing) a permanent home in Cyprus.
Under the 60-day rule the day of residence is the arrival date at port or airport in the republic of Cyprus while the day of departure from Cyprus counts as a day of non-residency in Cyprus. Applicants should duly stamp their passports during entry and exit from Cyprus Authorities while tickets should be kept with their boarding passes.
Tax benefits of Cyprus Tax Residents
Individuals who are Cyprus tax residents, whether under the “60-day rule” or under the “183-day rule” are taxed in Cyprus on their worldwide income but certain exceptions apply, as follows:
A Cyprus tax resident individual but non-domiciled in Cyprus is exempt in Cyprus from taxation on his/her worldwide dividend and ‘passive’ interest income. An individual who does not have a “Domicile of Origin” in Cyprus, is only considered to be domiciled in Cyprus for tax purposes when the individual has been a tax resident of Cyprus for a period of at least 17 years out of the last 20 years prior to the tax year in question.
Profit from the sale of securities is exempt from tax in Cyprus. ‘Securities’ include, inter alia, shares in local or foreign companies, bonds, debentures, options etc, except in cases where the value of the shares derives from the value of immovable property in Cyprus.
An individual who is going to be employed in Cyprus and his/her income will exceed €100.000, and, provided that he/she has not been a tax resident of Cyprus prior to the commencement of his/her employment in Cyprus, he/she will enjoy 50% discount on his/her income tax in Cyprus, for a period of 10 years.
Income from employment carried out outside Cyprus is exempted from Cyprus income tax, provided that the employment exercised outside Cyprus exceeds 90 days per tax year.