As we have reported previously, on 14 July 2017 the Parliament of Cyprus approved a bill that gives the right to an individual to be considered as tax resident in Cyprus, provided that he meets certain requirements. The new provision provides an incentive to individuals who are not tax residents in any other state for any tax year to consider Cyprus as their tax residence.
On 22 September 2017 the Tax Department issued Interpretative Circular 2017/8 clarifying the conditions for securing tax residency status based on the 60-day rules, as well as the applicants’ obligations and responsibilities.
Interpretation Circular No. 8 provides that in order for an individual to obtain a Tax Residency Certificate based on the above mentioned rules he/she must submit a specific return (TD126) together with supporting documents, such as copy of passport, boarding passes, title deed or lease agreement for property in Cyprus, employment or related contract, etc.
A Tax Residency Certificate can be issued even before the accumulation of 60 days of stay in Cyprus in a year provided that the following are applicable:
- all other conditions of the 60-day tax residency rules are satisfied;
- the application for issuance of a Tax Residency Certificate concerns receipt of dividends or interest from sources outside the Republic of Cyprus, supported by relevant documentation;
- the name of the tax authority or other organisation to which the Tax Residency Certificate will be presented will be written on the certificate.
It is further clarified that in order for a property in Cyprus to be considered as permanent residence the relevant person must make all arrangements for the maintenance of the property in a usable condition. The applicant should further arrange that the property is available to him at all times.