Cyprus Tax Residency & Relocation Advice - 183-Day Rule & 60-Day Rule - Understanding the Cyprus position Fivi Tramountanelli / Wednesday, July 22, 2026 / Categories: Client Enquiries Correspondence between CYAUSE and the Prospect Client followed a complimentary call _________________________________________________________________________________________________________________ From CYAUSE to Prospect Client Hello both, below our responses in blue. I believe we have not covered everything at this preliminary stage. Looking forward working together! Have a great weekend ______________________________________________________________________________________________________________________ From Prospect Client to CYAUSE Thank you Kyriakos, After speaking with our UK consultant, here the following: Before we proceed, we would appreciate some further clarification on a few points to ensure we have a complete understanding of the Cyprus position. 1. 183-day rule vs. 60-day rule Could you please expand on the distinction between the two residence tests? Your response suggests that the main difference is simply the number of days spent in Cyprus, whereas our understanding is that the 60-day rule is subject to a number of additional conditions, including: the individual must not be tax resident in any other country; This is correct and also applies for the 183 days the individual must not spend more than 183 days in any other single country during the relevant tax year; As above the individual must maintain a permanent home in Cyprus (owned or rented); As above the individual must carry on a business, be employed, or hold an office (such as a directorship) in Cyprus. As above, stronger for the 60 days than the 183 days but these are key requirement for the non dom --> same in your case (60 & 183 days) Could you please confirm that this is correct and explain how these conditions are applied in practice? As above and explained in previous correspondence; rent of property, car, bank account, usage of overheads and facilities in Cyprus. We can discuss this over then phone if needed. 2. Cyprus Tax Residence Certificate We would also appreciate clarification regarding the Tax Residence Certificate. Your response indicates that Cyprus generally no longer issues Tax Residence Certificates unless requested by a foreign tax authority, and that the Non-Domicile Certificate serves a similar purpose. Our understanding is that these are different documents. Whilst the Non-Domicile Certificate is useful in confirming non-dom status, the Tax Residence Certificate is the specific document used to evidence Cyprus tax residence for treaty purposes and when dealing with foreign tax authorities. Could you therefore please confirm: under what circumstances a Cyprus Tax Residence Certificate can be obtained; In your case if the Italian or Equivalent authorties request it from you. when it is normally issued; As above - when overseas authorities need it during your overseas record / file / tax return review - usually due to overseas exit tax laws. and whether it remains available for treaty and foreign tax authority purposes. Yes once issued. As explained the non dom - is also a tax residency certificate for a different local tax purposes, --> adequate evidence to showcase your tax residency. 3. Local / Nominee Director You mention that appointing a local director is advisable. Could you please explain more specifically what role the local director would perform in practice? For example, would the local director be expected to: participate in and chair board meetings; Yes approve key commercial decisions and contracts; Yes, if he or she is the only director. sign board minutes and maintain corporate records; As above. have authority over banking arrangements where appropriate; Usually they do not have banking access provide evidence that the company's central management and control is genuinely exercised from Cyprus? Yes via his / her appointment, involvement and board meetings. We would like to understand the practical substance of the role rather than it being merely a formal appointment. In essense is merely a formal appointment; it also coinsides with the annual fees; you can not expect low directors fees for all the responsibility against the Company's taxes and compliance requirements and expect significant involvement to the business. Important note: As you will both apply for the non dom you should also be directors of your companies hence a local director may not be needed. We can discuss this as well over the phone - i believe i have expained this in our previous call. 4. VAT and Transfer Pricing As the Cyprus company is expected to provide consultancy services to UK companies, we would appreciate a more detailed explanation of: the VAT treatment of these cross-border services; No VAT for services *1 whether the reverse charge mechanism applies; Only for EU transactions. *1. whether VIES reporting will be required; N/A - only for EU and what transfer pricing documentation and arm's length support should be maintained for service fees charged to UK group companies. Depends on the volume of transactions in a calendar year. Note: 1*. VAT advice can be provided once we understand in detail the operations of the Cyprus entity and onboard you as clients. The information provided above represents the standard treatment without looking into details of the specific activities and transactions of your proposed entity. 2. All of the above are not considerations for using a Cyprus entity as they are EU VAT laws applicable to all EU companies used; i.,e any for any EU company issuing invoices to the UK entity all of the above will have the same treatment and requirements as for a Cyprus entity. 5. Tax-Free Income The explanation regarding tax-free income would benefit from a little more detail. Could you please distinguish the treatment from the perspective of: Cyprus Income Tax; Special Defence Contribution (SDC); the General Healthcare System (GeSY/GHS); and any reporting obligations. In particular, whilst dividends and interest may be tax efficient for a Cyprus non-dom, we understand that GeSY contributions and reporting obligations may still apply in certain circumstances. The maximum GeSY payable is less than €4,770 per year. It is calculated based on the total tax year, applicable income. It is a simple calculation not material or significant at this stage of the process. We can explain it to you over the phone. The filings are roudimentary and perfomed by the accountants depending on the revenue stream; not important at this stage of this proposal as too insignificant. 6. UK Pension Could you also please confirm the current Cyprus tax threshold applicable to UK pension income for the 2026 tax year, together with the relevant legislative basis? We have received alternative information from another adviser quoting a threshold of €3,420, so we would appreciate confirmation of the current position. In 2026 the tax rate increased to 5% on income > €5,000 (used to be >€3,420) 7. Liquidations / MVLs / Capital Reductions (Quiris and Amplify) The response indicating that these proceeds are "usually tax free" is helpful, but we believe this point requires further distinction. Could you please explain specifically: the Cyprus tax treatment of distributions received following an MVL, liquidation or capital reduction; If they are reserves / profits they are tax free in Cyprus. and separately confirm that any UK anti-avoidance considerations (including Temporary Non-Residence rules, Transactions in Securities legislation and other relevant UK provisions) fall within the scope of UK tax advice rather than Cyprus tax advice. Correct 8. Italy Finally, thank you for your comments regarding Italy. We agree that any questions concerning Italian tax residence are primarily matters of Italian tax law. However, for completeness, could you please confirm that, for the purposes of qualifying under the Cyprus 60-day rule, [A] must: not be tax resident in Italy (or any other jurisdiction); and Correct not spend more than 183 days in Italy (or any other single country) during the relevant tax year. Correct We appreciate your assistance and look forward to your clarifications. Kind regards, 5 Rate this article: No rating Tags: RelocationCyprus relocationCyprus Tax183 day rule60-day ruleCY tax residency Please login or register to post comments.