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Cyprus: tax resident status in 2 months?


Ciprus: 2 hónap alatt adórezidens státusz?On July 14th, 2017 the Cypriot Parliament decided on changes in the tax laws, and created the “60-day rule” for the clarification of an individual’s tax resident status. The law will be in force from January 1st, 2017, meaning that individuals resident in Cyprus for tax purposes will be able to take advantage of the benefits from the 2017 tax year.

According to the earlier regulations, an individual became tax resident in Cyprus, if they spent more than 183 days on the island. This has now been amended, so that, under certain conditions, it will be enough to spend 60 days there. The conditions which must be met are as follows:

  • the individual concerned must not spend more than a total of 183 days in any other country
  • the individual concerned must not be resident for tax purposes in any other country
  • the individual concerned must spend at least 60 days in Cyprus
  • the individual concerned must have some other link to Cyprus

With this legislation, Cyprus has taken a major step towards attracting those individuals to the island, the majority of whom enjoy freelance status, who have had significant problems until now acquiring tax resident status. There are very many consultants, computer programmers and experts in project work who travel from country to country, never spending more than 2-3 months in any country in a given year. The exchange of information has caused a serious problem with these people, as they are unable to prove to the banks where they are resident for tax purposes. Individuals acquiring tax resident status in this way will also be able to take advantage of the rules applying to the “Resident but not Domiciled” status, meaning that income arising from capital gains, interest and dividends will be favourably taxed in Cyprus.