Cyprus taxes its residents on income from anywhere in the world and its non-residents only on income arising in Cyprus. Which side a person falls on depends mainly on days spent in the country and, under one test, on more than days. The standard route is the 183-day test. Anyone present in Cyprus for more than 183 days between 1 January and 31 December is a tax resident for that year, and anyone present for fewer is not, unless the second route applies.
That second route, the 60-day rule, matters most to people whose working lives cross borders. An executive who runs a group from several countries may never reach 183 days in any of them, yet can still qualify as a Cyprus tax resident by meeting four conditions in the same tax year. Cyprus has been an EU member state since 2004 and charges corporate tax at 15 percent, so residence status also bears on how a company owned from there is treated.
What the 60-day rule requires
The two tests are alternatives, and meeting either one is enough. The 60-day rule asks for more than a count of days, because all four conditions must be met in the same tax year. The person must spend no more than 183 days in any other country and at least 60 days in Cyprus. The person must also keep a permanent home in Cyprus, which can be owned or rented, so a lease can satisfy that condition. The fourth condition is a working link: at some point in the year the person carries on a business in Cyprus, is employed there, or holds an office with a Cyprus tax-resident entity.
The conditions describe someone with a base on the island and a working connection to it who is not spending most of the year somewhere else. The 183-day test looks only at where a person was. The 60-day rule also asks where the person lives and works, which is why a stay of 70 days can qualify when the person has a home and a directorship in Cyprus, while the same stay without them cannot.
How days are counted, and what happens to a company
The day-count conventions decide close cases. The day of arrival counts as a day in Cyprus, and the day of departure counts as a day outside it. A person who arrives and departs on the same day is counted as present in Cyprus, while a person who departs and arrives on the same day is counted as outside. Someone who lands on a Tuesday and leaves on a Friday is therefore counted as present on Tuesday, Wednesday and Thursday, with Friday falling outside the count. A person tracking days therefore needs two running totals: days in Cyprus, which must reach 60, and days in each other country, none of which may pass 183.
Personal residence does not settle the status of a company the same person owns. A person who stays only 60 days a year leaves the company needing actual substance in Cyprus. Tax authorities look at where the majority of the board lives, and a company whose directors mostly live elsewhere will almost certainly not be treated as Cyprus-resident. The two questions are tested separately, and meeting one does not answer the other.
Residency is also separate from domicile, which governs the Special Defence Contribution. A foreigner who becomes a Cyprus tax resident is treated as non-domiciled for up to 17 years and is exempt from that contribution. Anyone resident for at least 17 of the previous 20 years is deemed domiciled and pays 5 percent on dividends and 17 percent on passive interest. Income tax on residents is progressive, running from zero on the first €22,000 to 35 percent above €72,000.
Employment income has its own reliefs. Salary for work done outside Cyprus for more than 90 days in a tax year, for an employer that is not Cyprus-resident, is fully exempt. People who were non-resident for at least 15 consecutive years before taking a Cyprus job receive a 50 percent exemption on that employment income above €55,000, for up to 17 years. Gains on qualifying shares are exempt unless the underlying assets include immovable property in Cyprus, and the country charges no inheritance, wealth or gift tax.
In practice, each of these rules turns on facts that can be shown on paper: a lease or title for the home, a contract or directorship, a calendar of arrivals and departures, and the residence of a company’s directors. This summary is general information and not advice on a particular case. Paris Mavronichis & Co LLC, a law firm in Nicosia, has published an overview of Cyprus tax residency and non-domicile status that is useful reading on the day-count rules and the domicile tests.
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