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Cyprus Tax Residency for Individuals - By staying in Cyprus 60 days during the year

On 14 July 2017, the Parliament of Cyprus approved a bill granting tax resident status to individuals that spend at least 60 days in Cyprus per year, provided that certain conditions are met. This incentive applies retroactively as from 1 January 2017.

Specifically, the Income Tax Law has been amended so that an individual who does not remain in any other state for one or more periods, which altogether exceed 183 days and at the same time, is not a tax resident in any other state for the same tax year, to be considered a Cyprus tax resident, provided that:

1) He remains in Cyprus for at least 60 days during the tax year
2) He carries out business activities in Cyprus and/or works in Cyprus and/or is a director in a company tax resident in Cyprus at any time during the tax year
3) He maintains a permanent residence in Cyprus which is either owned or rented

It shall be noted that an individual is not considered tax resident in Cyprus in the tax year, if in that year the exercise of any business activities and/or employment in Cyprus and/or the holding of a post to a taxable person of Cyprus, have terminated.

 

How are the 60 days calculated?

1) The day of departure from Cyprus is considered as a day outside Cyprus
2) The day of arrival in Cyprus is considered as a day in Cyprus
3) Arrival in and departure from Cyprus within the same day is counted as one day in Cyprus
4) Departure from and return to Cyprus within the same day is counted as one day outside Cyprus

 

What are the applicable tax benefits?

An individual employed in Cyprus with income that exceeds €100.000 per year, provided that he had not been tax resident of Cyprus prior to the commencement of his employment in Cyprus, he is allowed for 50% exemption on his remuneration for a period of 10 years, which significantly reduces his income tax liability.
At the same time, an individual is granted exception from income tax or defense tax on dividends or interest received either in Cyprus or abroad, provided that such individual is considered a non-dom in Cyprus.

 

Transfer of the tax residency of an individual from an EU country to Cyprus

The application for the issue of a Registration Certificate (MEU1A) is submitted by a European Union citizen and family members who are also citizens of a member state, within four months from the date of entry into Cyprus.

For the issue of a Registration Certificate the EU citizen must submit the following documents, in case that the purpose of residing in Cyprus is employment activity:

1) Valid Passport or identity card and copies of the same
2) Confirmation of Engagement by the employer or certificate of employment
3) Two passport-sized photographs
4) Rental agreement
5) Bank Account

The above documents will be needed to file the MEU1A to obtain the yellow slip from the Migration Office.

The physical presence in Cyprus for one morning is needed for the purpose to complete the above procedure.

Having received the yellow slip from the Migration Office the individual should proceed to register the company as an employer and the individual as an employee with the National Insurance in Cyprus.

Having received the yellow slip from the Migration Office the individual should proceed to register with the Income Tax Office in Cyprus and obtain a Tax Identification Code (TIC).