New, additional Cyprus residence test


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The Cyprus Parliament has voted an addition to their current simple ‘183 days’ residence test to include an additional three criteria which could make an individual resident for tax purposes.

This will not affect you if you are already living in Cyprus for 183 days a year.

Current residence rule

Cyprus currently has a very simple residence rule – an individual is regarded as tax resident if they cumulatively spend more than 183 days physically present here during a calendar year (the tax year).

New, additional rule

Besides the above rule, an individual will now also be resident in Cyprus if they meet all the following criteria:

  1. They spend more than 60 days in Cyprus each tax year; and
  2. They carry out any business or are employed in Cyprus or are an officer (director) of a Cyprus resident company; and
  3. They maintain a permanent residence in Cyprus (owned or rented).

Note, however, that this will only make you Cyprus resident if you are not tax resident elsewhere and do not spend 183 days in another country per annum.

Once effective, this will apply for the 2017 tax year, which started on 1st January.

Will this affect you?

This is unlikely to make any difference to those already living permanently in Cyprus or planning to do so. It will only apply to people spending a relatively short time here and who have other connections with Cyprus without being resident elsewhere.

It may catch (and probably actually benefit) some individuals who move around a lot, or who are not resident anywhere (so-called ‘fiscal nomads’), giving them a permanent base. Given the beneficial nature of the Cyprus tax regime for non-domiciles, this would not necessarily be a bad thing.

Reminder of residence rules

Generally, a day of arrival counts as a day of residence (even if you leave again later the same day) and a day of departure counts as a day of non-residence (even if you come back the same day).

Cyprus takes a split-year approach. If you arrive in the second half of the year, you will be tax resident from 1st of January of the following year, assuming that you stay for more than 183 days in that year. If however you arrive on, say 30th April, and you are in Cyprus for more than 183 days that year, then you will be tax resident from 30th April.

It is possible to meet the tax residency criteria of both Cyprus and UK simultaneously. However, you can only be tax resident in one country, so the UK/Cyprus Double Tax Treaty “tie-breaker” rules will determine in which country you are resident for the purpose of taxes covered by the agreement.

Cross-border tax planning can be very complex, particularly if you have assets and/or spend time in more than one country. The new automatic exchange of information regimes makes it even more important for you to get it right. Blevins Franks has offices in the UK and Cyprus, as well as France, Spain, Portugal and Malta, and has over 40 years’ experience providing cross-border tax, estate planning and investment solutions to British expatriates.

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All information in this article is based on Blevins Franks’ understanding of legislation and taxation practice at the time of writing; this may change in the future. It should not be construed as providing personalised taxation, investment or pension advice. You should take advice for your circumstances.

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.