New tax residence provisions for individuals

Law 119(I) of 2017, which amends the provisions of the Income Tax Law regarding residence of individuals, has now been published in the official gazette.

Prior to the enactment of the new law, individuals are resident in Cyprus for the purposes of income tax if they are physically present for at least 183 days in the tax year. Under the new law, with effect from 1 January 2017 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 amended residence criteria 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.

For further advice please refer to Philippos Aristotelous or your normal contact at Elias Neocleous & Co LLC