On 14 July 2017, the House of Representatives of Cyprus passed an amendment to the Cyprus Income Tax Law (2002 – 2016 as amended) (the “Cyprus Income Tax Law”) whereby an individual who spends in Cyprus 60 (sixty) or more days will be considered as a Cyprus tax resident provided that certain conditions are met.
This can be very beneficial for persons who have business ties in Cyprus since an individual who is tax resident in Cyprus and who is not domiciled in Cyprus is granted an exemption from taxes on dividends received either in Cyprus or abroad.
B. TAX RESIDENT INDIVIDUAL – NEW PROVISIONS
Under the new provisions of the Cyprus Income Tax Law, an individual will be a tax resident in Cyprus provided that all the below conditions are met:
- The individual stays in Cyprus for 60 (sixty) or more days in a tax year (1 January – 31 December)
- The individual, at any time during the tax year, exercises any business in Cyprus and/or is employed in Cyprus and/or holds a post (i.e. a director) in a company which is tax resident in Cyprus;
- The individual maintains a permanent home in Cyprus which can either be owned or rented.
- The individual does not remain in any other country for one or more periods which altogether exceed 183 (one hundred eighty three) days in the same tax year and he is not a tax resident in any other country in the same tax year.
It is clarified that an individual who meets the above conditions will not be considered a tax resident of Cyprus provided that, in the same year, he cease to i.) exercise of any business and/or employment in Cyprus and/or ii.) hold of a post in a company tax resident in Cyprus.
C. ENTRY INTO FORCE
The new provisions are effective as from 1 January 2017.