On 14 July 2017, the House of Representatives unanimously voted and approved an amendment to the definition of the “Cyprus Tax Resident Individual” term in the Income tax law.
In detail, an individual who does not remain in any other jurisdiction for one or more periods which altogether exceed 183 days in the same tax year and is not a tax resident of another jurisdiction within the same tax year, can be considered a Cyprus Tax Resident Individual if the following conditions are satisfied.
• he should remain in Cyprus for at least 60 days during the tax year;
• he should pursue any business in Cyprus and / or to work in Cyprus and / or to be a director in a company resident in Cyprus at any time during the tax year and
• he should maintain a permanent residence in Cyprus, which can be either owned or rented
It should be clarified that if the employment/business or holding of an office as per the condition (ii) is terminated, then the individual shall cease to be considered a Cyprus tax resident for that tax year under these extended rules.
Advantages of Cyprus Tax Residency
Cyprus tax residents are liable to Cyprus tax on their worldwide income. The current Cyprus income tax rates are the following:
|Tax Base (EUR)||Tax Rate (%)|
|Up to €19.500||0%|
|€19.501 to €28.000||20%|
|€28.001 to €36.300||25%|
|€36.301 to €60.000||30%|
These tax incentives exist for individuals employed in Cyprus who were not previously Cyprus tax residents:
• The lower of €8.550 or 20% of the remuneration from any office or income from employment in Cyprus is exempted from income tax for a period of 5 years. This incentive will expire in 2020.
• For individuals with employment income exceeding €100.000 per annum there is a 50% tax exemption which can be applied for a 10 year period.
Any individuals which are only Cyprus tax residents but not Cyprus domiciled are exempted from the Special Defence Contribution which is imposed on certain types of income such us dividends, interest and rents.