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Cyprus tax residency certificates for individuals can now be issued before the end of the relevant tax year - Cyprus tax residency

The Cyprus Tax Department (CTD) issued circular 2017/8 on 10 March 2017 stating that individuals can now apply for a tax residency certificate at any time during the tax year without first having to reside in Cyprus for 183 days.

The purpose in mind is to facilitate Cypriot tax residents who wish to benefit from the provisions of Double Tax Treaties between Cyprus and third countries, so as not to suffer withholding tax at source upon receipt of income from sources outside Cyprus.

As per the Circular, Cyprus tax resident individuals may now request and obtain a tax residency certificate, even if they have not resided in Cyprus for at least 183 days during the tax year, as at the date of request of the certificate. Towards this end, a declaration will need to be completed and submitted with the CTD that the individual intends to reside in Cyprus for at least 183 days during the tax year, thus becoming a Cyprus tax resident.

The Circular goes further to clarify that if, for any reason, the applicants fail to become Cyprus tax residents during the tax year, they are obliged to inform the CTD accordingly, so that the certificate will be revoked.

Previously tax residence certificates were issued only after the relevant condition was met and only after the tax return for the relevant year had been submitted.  This created various administrative problems in claiming double tax treaty benefits usually resulting in tax being withheld at source with the applicant having to subsequently apply for a refund.  The new policy solves this problem. Cyprus tax residency