On 31 December 2022, important changes to the tax residency test under Cyprus income tax law came into force.

These changes had been due to come into force following the enactment, almost 12 months’ earlier, of amendment 193(I)/2021 on 21 December 2021.

The amendments provide for an additional test for determining the corporate tax residency based on the incorporation principle, aiming to capture Cyprus incorporated or registered companies that are not tax resident in any other jurisdiction.

In accordance with the Income Tax Law amendment, the definition of a “resident in the Republic” is enhanced so that a company established or registered under any applicable Law in Cyprus, which has its management and control exercised outside the country, is considered to be a resident of Cyprus, for tax purposes, unless such company is a tax resident in any other country.

The existing tax residency test, of management and control, will continue to apply. Therefore a company that has its management and control in Cyprus will continue to be considered as a tax resident of Cyprus.