New “60 Day” Tax Residency Rule for Individuals in Cyprus
In July 2017, the Cyprus Parliament voted for an amendment to the current criteria used to determine Cyprus tax residency. In addition to the 183 day rule, a second test is being introduced in relation to an individual’s tax position in Cyprus.
The current “183 day rule” applies to individuals who have physically resided in Cyprus for more than 183 days during one calendar year.
In addition to this, a second test will be implemented whereby an individual will be able to become Cyprus tax resident in 60 days. This rule will be applicable to individuals who do not spend more than 183 days in Cyprus or in any other jurisdiction. It is anticipated that this amendment will be effective retrospectively as from 1 January 2017 (the start of the Cyprus tax year).
Criteria to be Met for an Individual to be Considered Cyprus Tax Resident in 60 Days:
The “60 day rule” applies to individuals who in the relevant tax year:
- reside in Cyprus for at least 60 days;
- operate/run a business in Cyprus and/or are employed in Cyprus and/or are a director of a company which is tax resident in Cyprus. Individuals must also have a residential property in Cyprus which they own or rent;
- are not tax resident in any other country;
- do not reside in any other single country for a period exceeding 183 days in aggregate.
Days Spent In and Out of Cyprus
For the purpose of the rule, days “in” and “out” of Cyprus are defined as:
- the day of departure from Cyprus counts as a day out of Cyprus;
- the day of arrival in Cyprus counts as a day in Cyprus;
- arrival in Cyprus and departure on the same day counts as a day in Cyprus;
- departure from Cyprus followed by a return on the same day counts as a day out of Cyprus.
Cyprus Tax Rules
Cyprus tax rules also apply to tax resident non-domiciled individuals.
The key tax benefits are:
- a zero rate of tax on interest
- a zero rate of tax on dividends
Additional tax advantages are available to individuals fulfilling the tax residency criteria and comprehensive details are available in Dixcart Article 467: Another Reason to Choose Cyprus – The Cyprus Non-Domicile Regime
How Can Dixcart Help?
Dixcart can help individuals to assess their tax position under the new rules and can provide advice regarding the action that needs to be taken.
Additional Information
For further information about the attractive tax regime for non-resident individuals who are classified as tax resident in Cyprus under the “60 day rule”, please contact the Dixcart office in Cyprus: advice.cyprus@dixcart.com.
