NEWS & PUBLICATIONS
NEWS
Feb 03, 2022
|  Amendment To The Definition Of Corporate Tax Residency

On 09.12.2021, the Cyprus House of Representatives passed important amendment to the Income Tax Law and Special Contribution for the Defence Law (the “Amendment“)

The Amendment was published in the Cyprus Government’s Official Gazette on 21.12.2021.

The Amendment is related to the definition of Corporate Tax Residency for Companies registered in the Republic of Cyprus and will apply as from 31.12.2022.

Additional corporate tax residency definition

Currently, pursuant to the Cyprus Income Tax Law, a company is considered to be a tax resident of Cyprus if its management and control is exercised in Cyprus (the “Management and Control Test”).

In order to strengthen the existing tax residency rule framework beyond the Management and Control Test, with this current amendment to the Cyprus Income Tax Law, the term “Cyprus Tax Resident Company” is expanded to also include a company that was incorporated/registered in the Republic of Cyprus, but whose management and control is exercised outside the Republic of Cyprus, as long as the company is not a tax resident in any other jurisdiction (the “Incorporation Test”).

The purpose of the additional “Incorporation Test”, is to capture Cyprus incorporated / registered companies that are not tax resident in any other jurisdiction (commonly referred to as “stateless companies”).

The existing corporate tax residency test (i.e., the management and control test) will continue to apply, so that if a company has already its existing management and control in Cyprus, it will continue to be regarded as a tax resident of Cyprus i.e., its tax residency status will remain unaffected.

Therefore, any companies that are incorporated / registered in the Republic of Cyprus which:

  • Their management and control is exercised outside Cyprus; AND
  • They are not tax resident in any other jurisdiction

will now be considered as Cyprus tax residents and as such, taxed in Cyprus on their worldwide income.

How can Fiduciana assist?

For more information and how this can impact your business, feel free to contact our team at