The concept of economic substance in tax planning is a continuously evolving, and increasingly important subject area, in the economy. The absence of economic substance triggers an alert for the possibility of tax avoidance. Recent developments in both domestic and EU laws place a great importance in economic substance, emphasizing that international cooperation is the only way to minimize tax avoidance.
Cyprus Tax Residency renders access to the Cyprus tax framework and to tax benefits arising from the Cyprus double tax treaty network.
Substance has a different meaning in each jurisdiction. For Cyprus, adequate measures will need to be taken proving that the company is managed and controlled in Cyprus and that substantive business operations are genuinely carried out in Cyprus.
As a minimum however, the following principles should form a starting basis for a foreign jurisdiction to treat the company as a Cyprus tax resident:
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February 26, 2022