The Income Tax Law has been amended so that an individual who does not remain in any state for one or more periods which together exceed 183 days in the same tax year and who is not tax resident in any other state for the same tax year, be considered to be a tax resident of Cyprus, provided that they meet the following conditions:
- Remain in Cyprus for at least 60 days during the tax year;
- Pursue a business in Cyprus and/or work in Cyprus and/or are a director of a company which is tax resident in Cyprus, at any time during the tax year;
- Maintain a permanent residence in Cyprus, which can be either owned or rented.
To be considered as Cyprus tax resident in the tax year, the taxable person’s involvement in the business and/or employment in Cyprus and/ or the holding of a post in Cyprus must not have not have ceased.
For the purposes of calculating the days of stay in Cyprus the following rules apply:
- the day of departure from Cyprus is considered as a day outside 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 counted as one day in Cyprus;
- departure from Cyprus and return to Cyprus within the same day is counted as one day outside Cyprus.
Thus, under the new provisions, an incentive is given to an individual who is not a tax resident in any other state for the same tax year to transfer his tax residence to Cyprus and to be taxed only on income from the activities the individual undertakes in Cyprus.