New rules for tax residency in Cyprus
On July 14 the Cypriot Parliament adopted long-awaited and long-discussed amendments to the Income Tax Law regarding the tax residency for individuals. The full text of the adopted amendments will be soon published.
As reported, to obtain the status of a tax resident, individuals will need to spend at least 60 days a year in the country, have a residence and work contract, or a position on a company’s board of directors in Cyprus. The company may be controlled by the same individual. At the same time, an important restriction is a requirement not to be a tax resident of any other country in the same time frame, i. e. not to spend 183 days a year or more in any other country in the world.
The Cyprus tax regime without a domicile is one of the most attractive for individuals in the world. The adopted amendments to the Tax Law are designed to attract the interest of the most well-off public from different countries and is expected to make the citizenship investor program even more popular.
However, investors should keep in mind that neither citizenship nor the tax residency guarantee their exemption from taxation in other countries. Thus, tax obligations remain in place for the US citizens and the Green card holders regardless from their visits to the country. Meanwhile, several states in the world practice personal income taxation based on vital or economic interest focus.