Does obtaining Cypriot citizenship affect tax residency?

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In 2025, REVERA Private Clients lawyers forecast an increase in applicants for Cyprus citizenship, and in this regard, our clients have questions about whether this would cause an increase in the tax burden and changes in tax resident status?

Under Cyprus tax law, income tax liability is imposed based on an individual’s tax residence and sources of income, and not based on  his/her nationality. Nowhere in Cyprus tax legislation is there any provision for levying tax based on nationality.

According to article 2 Cyprus Income Tax Legislation an individual is considered to be a tax resident of Cyprus if he is physically present in Cyprus for a period which in general exceeds 183 days during the tax year (tax year starts from the 1st of January to the 31st of December).

Moreover, from 01/01/2017, an individual can also be considered a tax resident of Cyprus, if he/she stays in Cyprus for at least 60 days during the tax year (the so-called 60-day rule).

To apply the 60-day tax residency rule, a taxpayer must meet all of the following criteria:

• Stay in Cyprus for at least 60 days cumulatively during the tax year; 
• Has a permanent residence in Cyprus, owned or rented; 
• Is an officer (i.e. director) of an operating company that is tax resident in Cyprus and/or carries on business in Cyprus (i.e. is self-employed) or works for a company that is tax resident in Cyprus; 
• Not reside in any other country for a total of more than 183 days; 
• Not be a tax resident of another country.
   

If an individual is a tax resident of Cyprus, tax is levied on income accruing at or arising from sources both in Cyprus and outside Cyprus (income from all over the world), such as:

• Profits or other benefits from trading activities (including self-employment income),
• Profits or other benefits from any position or employment,
• Dividends, interest or prepayments (however, please note that dividends are exempt from income tax),
• Pension,
• Rent, royalties, premiums or other profits derived from the property,
• Any amount or compensation for goodwill after deducting the costs of acquiring such goodwill.

If the individual is not a tax resident of Cyprus, tax is payable on income accruing or arising from:

• Profits or other benefits from a permanent establishment located in Cyprus,
• Profits or other benefits from an office or work exercised in Cyprus,
• Pensions based on past work performed in Cyprus,
• Any rental property located in Cyprus,
• Any amount or compensation for goodwill arising in Cyprus, after deducting the costs of acquiring such goodwill,
• Gross income from practicing any profession in Cyprus.
   

If an individual remains a Cyprus tax resident, the change of his citizenship will not affect his Cyprus tax resident status, and he will not lose any benefits/incentives of acquiring Cyprus citizenship. In this regard, the tax provisions previously applicable to him will continue to apply to him after his nationality changes.

Authors: Yaroslavna Zadesenskaya, Julia Tsivileva

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