Cyprus Tax Residency

Tax residency for individuals

The test of tax residency for individuals is based on the number of days physically spent in Cyprus.

183 day rule: A person is considered a Cyprus tax resident if they spend a total of 183 days in a calendar year in Cyprus.

60 day rule: A of 2017 Cyprus introduced the 60 day rule for obtaining Cyprus tax residency. For an individual to be eligible to become a Cyprus tax resident under the 60 day rule the following criteria need to met:

By physically present in Cyprus for a minimum of 60 days within the calendar year
Maintain permanent residence in Cyprus (owned or rented)
Is not a tax resident in any other country
Does not physically stay more than 183 days in another country
Have other Cyprus defined ties (i.e. carry out business in Cyprus)
Exercising business, being employed or holding an office in a Cyprus tax resident company. In case any of these are terminated before the end of the year-end (the 31st of December), then the tax residency status of the physical person is terminated.

Note: Other countries may have different rules on tax residency for individuals and it is therefore possible that an individual is considered to be a tax resident in more than one countries.

Tax residency for legal entities

In accordance to Cyprus tax laws, a Company is considered to be tax resident in Cyprus when its management and control is exercised in Cyprus.

As there is no definition of management and control in the Cypriot tax laws, it is generally accepted that the following conditions which are in line with international tax practices should be considered in determining whether a Company qualifies as a Cyprus tax resident:

All strategic (and preferably day-to-day) management decisions are taken in Cyprus by directors exercising their duties from Cyprus
The majority of the directors are Cypriot tax residents
An actual office is maintained in Cyprus
Hard copies of commercial documentation is kept in Cyprus
Accounting records are kept in Cyprus
Bank accounts are operated from Cyprus

Tax residency certificate

For legal entities a questionnaire confirming the management and control needs to completed. The questions to be answered relate to the constitution of the Board of Directors, place of holding shareholder meetings, granting of general powers of attorney, place of maintenance of book and records etc. It is also necessary for all annual corporate tax returns to have been submitted up to date for a tax residency certificate to be issued.

For individuals, a number of documents need to be submitted for a tax residency certificate to be issued. This includes, but is not limited to, title deeds or rental agreement of a Cyprus situated property, utility bills, passport, bank statements etc.