The “60 day rule” tax residency test for individuals
On the 14th of July 2017 the Cyprus parliament voted for a tax law amendment adding an additional test, known as the “60 day rule”, for the purposes of determining whether an individual is tax resident in Cyprus. The legislation will be effective as from tax year 2017.
Once the “60 day rule” is effective, an individual will be considered as a Cyprus tax resident if he/she satisfies either the “183 day rule” or the “60-day rule” for the relevant tax year.
The “60 day rule” applies to individuals who in the relevant tax year:
- do not reside in any other single state for a period exceeding 183 days in aggregate; and
- are not tax resident in any other state; and
- reside in Cyprus for at least 60 days, and
- carry out any business and/or are employed in the Republic and/or hold an office (such as directorship) of a company that is tax resident in the Republic at any time in the tax year, provided that such engagement is not terminated during the relevant tax year; and
- have a permanent residence in Cyprus (owned or rented).
For the purpose of calculating the days in and out of Cyprus should be considered in this way:
- the day of departure from Cyprus counts as a day outside Cyprus
- the day of arrival to Cyprus counts as a day in Cyprus
- arrival and departure from Cyprus on the same day counts a day in Cyprus
- departure and arrival in Cyprus on the same day counts as a day outside Cyprus.
Individuals who are Cyprus tax resident are subject to tax on their worldwide income. Some of the main features of the Cyprus tax system are:
- Dividend participation exemption
- Profits from the trading and disposal of securities (e.g. shares, bonds, debentures) are tax exempt
- No inheritance tax
- No withholding taxes
- Individuals who take up residence in Cyprus can apply for non-domicile status which offers significant tax advantages such the exemption from tax of worldwide dividends and interest income for a period of 17 years.
- 50% exemption on income from employment in Cyprus for a person who was not previously resident in Cyprus. The exemption applies for ten years, if the income from employment in Cyprus exceeds €100.000 per annum
- Attractive IP regime
- Notional interest deduction scheme
This article is intended to provide general information on the subject and does not constitute legal advice. For further information on the subject and for specific legal advice please contact us