A new set of tax residency rules that were approved last month in Cyprus are meant to supplement the country’s existing “183-day rule” rather than replacing it, International Investment now understands.

They are also deemed to have entered into force on 1 January 2017, rather than being set to go live next year.

As reported here yesterday, there was some initial confusion as to whether the new regs would be in addition to the existing 183-day rule or whether they would replace it, and when they would take effect.

The new “60 days rule test”, as some are calling it, creates an alternative way for those wishing to be deemed Cyprus tax resident to do so, should they find themselves unable to meet the 183-day requirement.

According to a spokesperson for the Cyprus office of an international business that is actively involved in helping people with their citizenship, residency and tax-related issues – who requested anonymity – Article 2 of  Cyprus’s Income Tax Law  has added as an option for an individual wishing to be considered a resident in the republic of Cyprus the meeting of the following new set of provisos:

That the individual

• does not remain in any other state for one or more periods which in total exceed 183 days within the same tax year
• is not tax resident in any other state for the same tax year, and…
• fulfils cumulatively the following conditions:

(i) remains in the Republic for at least 60 days within the tax year,

(ii) carries on any business in the republic and/or is employed in the republic, and/or “holds an office at a person tax resident in the republic at any time during the tax year”, and

(iii) maintains a permanent residence in the republic that they either own or rent themselves.

This set of provisos is considered not to be valid if, during the tax year in question, the Cyprus business that the individual has been carrying out, or their employment in the country, or their “holding of any office at a person tax resident in the republic” is terminated, the spokesperson said.

As noted yesterday, Cyprus’s tweaking of its tax residency rules comes at a time when many countries around the world are making changes to their visa, citizenship and residency requirements, in response to changing attitudes about globalisation.

The UK’s decision to leave the European Union, following a referendum on the matter last year, is seen as making many EU countries and countries with historic ties to the UK, such as Cyprus, re-evaluate and in some cases update their policies.

Cyprus has been an attractive destination for affluent Russians in particular since 2013, when its banking system fell on hard times, and the exchange of passports for investments helped to revive the island’s economy. This can be seen in the numerous Cyrillic street signs, restaurants and other elements of Russian culture in Limassol, on the island’s southern coast.

Source: internationalinvestment.net