A new circular issued by the Ministry of Finance on 01 February 2022 introduces changes to the 60-day tax residency rule in Cyprus. The purpose of the circular is to simplify the requirements for obtaining residency under this rule and expedite the issuance of the tax residency certificate.
Criteria: Under Cyprus tax law, an individual is considered a tax resident under the 60-day rule if the following conditions are met:
A. The individual does not spend more than 183 days, continuously or in total, in another country during the tax year.
B. The individual is not a tax resident in another country during that year.
C. The individual spends at least 60 days, continuously or in total, in Cyprus during that year.
D. The individual is engaged in business and/or working in Cyprus, or holds an office with a Cyprus tax resident company at any time during the year.
E. The individual either owns or rents a permanent residence in Cyprus.
Exemptions: The circular provides exemptions and clarifications. One exemption applies to individuals from the United Kingdom. If an individual claims tax residency based on the 60-day rule for a specific tax year and is also a tax resident in the United Kingdom during the same period, condition (B) mentioned above does not apply.
This exemption also applies in cases where an individual is a tax resident in a country that follows a different tax year than Cyprus. For example, if a tax year in one country begins in April 2022 and ends in April 2023, an individual applying for Cyprus tax residency under the 60-day rule may be exempt from condition (B) with approval from the Registrar.
60 Day Rule Certificate – Fast Track: To obtain a tax residency certificate under the 60-day rule, individuals who meet the specified conditions must complete and submit Form Τ.Φ.126 (2022) along with supporting documents to the Cyprus tax department. All supporting documents must be in English or Greek and appropriately stamped under Cyprus stamp duty law. If the documents are in a language other than English or Greek, an official translation must be provided.
The process for obtaining the 60-day tax residency certificate has been simplified and can now be done in advance, before the 60 days have passed. To qualify for the fast-track process, the following evidence must be provided:
- Proof of employment or holding an office.
- Justification for the need to expedite the procedure.
- Evidence of upcoming income from a source outside of Cyprus, demonstrating the urgent need for the tax residency certificate for tax administrators abroad.
Other Considerations: Individuals who qualify for the 60-day rule tax residency scheme and are also domiciled in Cyprus are required to pay Special Defence Contribution at the following rates:
- Dividend income: 17%
- Interest income: 30%
- Rental income: 3%