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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.
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.