On July 14th 2017 the Parliament of Cyprus has approved by common consent the proposal of amending the rules for determining tax residency of individuals in Cyprus.
The “60 day rule” intents to attract a significant number of individuals (investors, entrepreneurs, digital nomads, artists, sportsmen and other businessmen) who do not fulfill the tax residency requirements in any country. The absence of an established tax residency status may make them exposed to the tax authorities worldwide.
Specifically, the 183-day rule has been supplemented with a new test, the 60-day rule, in order to become a Cyprus tax resident on the basis of the “60 day rule” the concerned individual must meet cumulatively the following conditions:
- Remain in Cyprus for at least 60 days during the tax year in question
- do not reside in any other single state for a period exceeding 183 days
- is not tax resident in any other state
- Carry out business activities in Cyprus and/or work in Cyprus and/or be a director in a Company that is tax resident in Cyprus at any time of the tax year in question
- Maintain a permanent residence in Cyprus
Subsequently, under the “60 day rule” high earning individuals who are not tax residents in any other country for the same tax year can transfer their tax residence to Cyprus and be taxed only on income from the activities the individuals’ exercises in Cyprus, provided the above criteria are fulfilled.
Note: Cyprus tax resident status is abolished if his/her business and/or employment in Cyprus and/or position in a Cyprus tax resident have ceased.
Important tax benefits under the “60 day rule” or under the “183 day rule” are taxed in Cyprus on their worldwide income but certain exceptions apply, as follows:
- A Cyprus tax resident but non-domiciled in Cyprus has full exemption from taxation in Cyprus on his/her worldwide dividend and ‘passive’ interest income
- Income from employment carried out outside Cyprus is exempted from Cyprus income tax, provided that the employment exercised outside Cyprus exceeds 90 days per tax year
- An individual who is going to be employed in Cyprus and his/her income will exceed €100.000, and, provided that he/she has not been a tax resident of Cyprus prior to the commencement of his/her employment in Cyprus, he/she will enjoy 50% discount on his/her income tax in Cyprus, for a period of 10 years, provided that they have not been a tax residents of Cyprus prior to the commencement of their employment.
How to calculate the days of residency in Cyprus?
- The day of departure from Cyprus is considered as a day outside of Cyprus;
- The day of arrival in Cyprus is considered as a day in Cyprus;
- Arrival in Cyprus and departure from Cyprus within the same day is considered as one day in Cyprus;
- Departure from Cyprus and return to Cyprus within the same day is considered as one day outside of Cyprus.
For more information of how you can benefit from the new “60-days rule” regime, please contact us.