Certificates of tax residence for individuals

On 10 March 2017 the Tax Department issued a long-awaited circular on the procedure to be followed by individuals requiring certificates of tax residence in Cyprus. Tax residence certificates may be required for the purposes of claiming exemption or relief from overseas taxes, especially in respect of income from sources outside Cyprus. The tax authorities have issued certificates of tax residence to companies for many years, but until now there has been no system for issuing them to individuals.

Under Cyprus tax law, an individual is considered to be tax resident in Cyprus if he or she is physically present in Cyprus for more than 183 days in the tax year, which runs from 1 January to 31 December.

Under the recently-announced arrangements, individuals can apply for a certificate of tax residence at any time. A certificate will be issued even if the applicant has not yet completed the 183 days of physical residence in Cyprus in the relevant year as long as he or she is registered with the Tax Department and has been issued with a tax identification number (TIN), on condition that he or she provides an affidavit stating that he or she intends to stay in Cyprus for one or more periods which exceed 183 days in total in the tax year.

The new system is expected to make it much simpler for individuals who have interests abroad to provide evidence of their residence status to tax authorities overseas, particularly under the numerous double taxation agreements that exist between Cyprus and other countries.

The new arrangements could also simplify matters for individuals who are resident but not domiciled in Cyprus. In 2015, the government introduced tax concessions for these so-called non-doms, exempting investment income such as dividends and interest from all forms of Cyprus tax. These benefits are potentially available to anyone who has relocated to Cyprus but has lived here for less than 17 years. If you think you may benefit, you should consult your lawyer or tax adviser to find out if you qualify.