Taxation of international executives
For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than 1 year.
Individuals who remain in Cyprus less than 183 days in a calendar year are considered non- Cyprus tax residents.
However, the definition has been amended to also provide that, an individual who does not stay in any other country/jurisdiction, for one or more periods exceeding in aggregate 183 days in the same tax year and is not tax resident in any other country/jurisdiction for the same year, is deemed as a resident in the Republic in that tax year, if all of the following conditions are met:
1. the individual stays in the Republic for at least 60 days in the tax year
2. exercises any business in the Republic and/or is employed in the Republic
and/or holds an office with a Cyprus tax resident person at any time during the tax year
3. maintains (by owning or leasing) a permanent home in the Republic.
The law is further amended to clarify that an individual that cumulatively meets all the above conditions shall not be treated as a Cyprus tax resident in the tax year if, during that year the exercise of any kind of business in the Republic and/or employment in the Republic and/or holding of an office with a tax resident person in the Republic is terminated.
Are there special payroll considerations for short-term assignments?
What income will be taxed during short-term assignments?
During short assignments that do not result in Cyprus tax residency, only profits or other benefits from any office or employment exercised in Cyprus and other income arising from sources in Cyprus is subject to Cyprus taxation.
Are there any additional considerations that should be considered before initiating a short- term assignment in Cyprus?
Exemption from Cyprus tax may be available under the relevant article from a Double tax treaty.
A foreign employer of a person liable to Cyprus personal income tax on their salary is required to register with the Cyprus tax authorities and operate the PAYE system.
All information contained in this publication is summarized by KPMG Limited, the Cyprus member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity, based on the Cyprus Income Tax Law of 2002 (L.118(I)/2002) as amended, the Special Contribution for the Defence of the Republic Law of 2002 (L.117(I)/2002) as amended, the Assessment and Collection of Taxes Law of 1978 (L.4/1978) as amended, the Stamp Duty Law of 1963 (L.19/1963) as amended, the Capital Gains Tax Law of 1980 (L.52/1980) as amended, the Immovable Property Tax Law of 1980 (L.24/1980) as amended, the Cyprus VAT Law of 2000 (N95.(I)/2000) as amended, the Social Insurance Law of 2010 (L.59(I)/2010) as amended and the General Healthcare System Law of 2001 (L.89(I)/2001) as amended and the Informational guidance for General Healthcare System issued by the Cyprus Tax Department on 9 April 2019.
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Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.