According to authoritative media reports a proposed law has been presented to the Cyprus parliament to amend the rules for determining tax residency of individuals in Cyprus. Under the existing law individuals are resident in Cyprus if they are physically present for at least 183 days in the tax year.
The initial draft of the proposed new law provided that an individual will also be deemed to be resident in Cyprus if during the tax year concerned he or she maintains a permanent residence in Cyprus, undertakes any business or employment in Cyprus and is present in Cyprus for at least 60 days. All three conditions must be satisfied and the individual concerned must not be a tax resident of any other country (for example by reason of a physical presence there for 183 days) for the tax year in question.
The parameters for determining the alternative residence qualification are still under discussion, but the main purpose underlying the proposed new law is to enable individuals who are not tax resident elsewhere and who have a base and activities in Cyprus to be treated as resident in Cyprus and to qualify for the benefits of the Cyprus tax regime (including exemption from any form of taxation on investment income such as dividends and interest and income tax exemptions for new taxpayers) without having to be physically present for more than half the tax year.
There will no doubt be further changes as the proposed law passes through the legislative process. We will publish further developments as they occur.
