The Residence of a Company is based on the effective passing of “management and control” test as included in the Tax Department’s application form for the issuance of a Tax Residency Certificate. Key factors for the establishment of Residence are:

• Where the key decisions which are necessary for the conduct of the business of the company are taken,

• Where the location of the directors’ and shareholders’ meetings are held,

• Where the directors of the Company are residents, and

• Where minutes and statutory and other records are kept.

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However, amendments to the law were published on 21 December 2021 which alter this position and mean that from 31 December 2022, a Cyprus-incorporated company will, by default, be considered a tax resident of Cyprus (in addition to those passing the existing “management and control” test) unless they are able to prove that they are already tax resident in a different jurisdiction. However, there is a risk to be taxed at higher rates in other jurisdictions.

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In accordance with the relevant announcement published in the Official Gazette of the Republic:

“Currently, the definition of corporate tax residency is solely based on the management and control criterion.

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As of 31 December 2022, the definition of corporate tax residency is expanded to additionally include the incorporation test. More specifically, a company which is incorporated or registered in Cyprus, and its management and control is exercised outside Cyprus, should be considered a resident of Cyprus for tax purposes unless it is a tax resident in another country.”