Cyprus: Additional corporate tax residency test

Corporate tax residency test aims to capture Cyprus-incorporated or registered companies that are not tax residents in any other jurisdiction

Additional corporate tax residency test

An amendment to the income tax law, published in the official gazette on 21 December 2021, introduces an additional corporate tax residency test that aims to capture Cyprus-incorporated or registered companies that are not tax residents in any other jurisdiction (commonly referred to as “stateless companies”).

The effective date of the amendment is 31 December 2022.

Currently, a company is considered to be a tax resident of Cyprus if its management and control is exercised in Cyprus. The existing corporate tax residency test will continue to apply, so that a company that has its management and control in Cyprus will continue to be considered to be a tax resident of Cyprus (i.e., its tax residency status will not be affected by new measure).

Under the new provision, the definition of a “resident” is enhanced so that Cyprus-incorporated or registered companies (1) with management and control exercised outside Cyprus and (2) not tax resident in any other jurisdiction will now be considered as tax residents of Cyprus and as such, taxed in Cyprus on their worldwide income.

Read a December 2021 report prepared by the KPMG member firm in Cyprus

 

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