Friday 14th of July 2017 – A new bill was voted amending the Income Tax Law allowing an individual to acquire Cyprus tax residency by staying only 60 days in Cyprus, instead of 183 days, according to the Income Tax Law of 2002.

All of the following criteria must be met by an applicant:

1.  Remain in Cyprus for at least 60 days during the tax (calendar) year;
2.  Maintain a permanent residence in Cyprus, which can be either owned or rented;
3.  Not be a tax resident of any other State or remain in any other State for a period or periods exceeding          183 days in respect of any year he claims Cyprus tax residency;
4.  Exercise business in Cyprus or being employed in Cyprus or be a director in a company registered in              Cyprus at any time during the tax year.

Effectively this provision allow an individual who does not stay – for one or more periods, which do not exceed 183 days in total – and who is not a tax resident in any other country to be considered as a resident of the Republic of Cyprus.

It is clarified that an individual who cumulatively fulfils the above conditions is not considered as tax resident of Cyprus in the tax year, if in that year the exercise of any business and/or employment in Cyprus and/ or the holding of a post to a taxable person of Cyprus have ceased.

Exemption from special defence contribution tax which is levied on dividends, interest, and rental income for all those individuals that tax resident in Cyprus but are not domiciled in Cyprus.

It is noted that for employment purposes in Cyprus with earnings in excess of Euro 100,000, an individual is allowed for an exemption from tax of 50% of the salary for a period of 10 years, which significantly reduces his income tax liability.

We remain at your disposal for any further information/clarifications you may require as to the above.

NakLaw Team