Cyprus unveils major changes to tax residency regs

Note: This story has been updated. To see the updated article,  click here.

Cyprus has announced that it will implement what some observers are calling “significant” changes to its tax residency rules, beginning in January.

The changes were approved last month in a bill that was unanimously approved by the country’s parliament, and will see a new set of requirements introduced to prove tax residency, which until now has relied on a so-called “183-day rule”.

There appears to be some confusion, however, as to whether the new rules will be in addition to the 183-day rule, or whether they will replace it.

The new rules specify that to qualify for Cypriot residency, an individual must:

  • Remain in Cyprus for at least 60 days in the tax year in question;
  • Carry out business in Cyprus and/or be employed in Cyprus, or “hold an office to a person resident in Cyprus” at any time during this tax year; and
  • Maintain a permanent residence in Cyprus  that they either own or rent

The new rules also specify that to be considered a tax resident of Cyprus, the individual in question must not be tax resident in any other country, nor may they remain in another country for 183 days or more during the relevant tax year.

Different interpretations

According to a summary of the new tax residency rules on its website, the Society of  Trust & Estate Practioners (STEP) says the new regulations will replace the 183-day rule. This is also the interpretation of Soteris Pittas & Co LLC, a Limassol, Cyprus law firm.

But in an analysis of the new rules on PwC’s website, the firm’s experts say the new “60-day rule” tax residency test is being brought in in addition to the existing  183-day rule. This is also the understanding of Eurofast Global, an international business advisory concern.

Cyprus’s tweaking of its tax residency rules comes at a time when many countries around the world are making changes to their visa, citizenship and residency requirements, in response to changing attitudes about globalisation.

The UK’s decision to leave the European Union, following a referendum on the matter last year, is seen as making many EU countries and countries with historic ties to the UK, such as Cyprus, re-evaluate and in some cases update their policies.

ABOUT THE AUTHOR
Helen Burggraf
Helen Burggraf is the editor of International Investment. A US-trained journalist, she has worked in Rome, New York City and London, covering everything from the fashion and retailing industries to the global drinking water and water-treatment sector, private equity, and most recently, the international cross-border financial services/advice industry.

Read more from Helen Burggraf

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