An individual is considered to be tax resident in Cyprus if a physically presence in Cyprus is established for an aggregate period exceeding 183 days in a tax year.

With effect as from 1 January 2017, an individual may also be considered tax resident in Cyprus if she/he satisfies the ''60 day rule''. The ''60 day rule'' applies to individuals who in the relevant tax year:

• do not reside in any other single state for a period exceeding 183 days in aggregate, and
• are not tax resident in any other state, and
• reside in Cyprus for at least 60 days, and
• have other defined Cyprus ties. To satisfy this condition the individual must carry out any business in Cyprus and/or be employed in Cyprus and/or hold an office (director) of a Company tax resident in Cyprus at any time in the tax year, provided that such is not terminated during the tax year. Further, the individual must mantain in the tax year a permanent residential property in Cyprus, which is either owned or rented by him/her.

Tax resident individuals are liable to tax in Cyprus on their worldwide income, from all sources within and outside Cyprus, whereas for non-tax resident individuals, tax is levied on income accruing or arising from sources in Cyprus only.

There are specific types of income which are exempt for tax purposes as well as allowances and deductions that decrease the personal income tax.

The following income tax rates apply to physical persons (for the tax year 2011 and therefore):

Notes

• Foreign tax paid can be credited against the personal income tax liability irrespective of the existence of a double tax treaty with the foreign country.
• Foreign pension is tax free up to the first €3.420 annually and is thereafter taxed at a flat rate of 5%. The taxpayer can however elect to be taxed at the normal tax rates and bands as set out above. This is a choice which may be made year-on-year.

The above should be used as a source of general information only. It is not intended to give a definitive statement of the Law and is subject to the Disclaimer.

For further details on these issues, please do not hesitate to contact us.