The amendment Law 119(I)/2015 which came into force on 16/07/2015 affects only Cyprus tax residents. What currently applies is the following:
- A non-tax resident (individual or legal person) has no obligations for SDC (as this was the case prior to the amendment).
- A tax resident- legal person has the same obligations for SDC as these were applicable prior to the amendment.
- A tax resident- individual will only have obligations for SDC provided that is domiciled in Cyprus. This is the reason the amendment law came into effect.
A person may have either of the two options of domicile:
- A “domicile of origin” which refers to the place of birth. In case of a child born while its father is still in life, then this child’s domicile of origin will be the same as its father’s at the time when this child was born. In case an illegitimate child is born, or born after the death of its father, then this child’s domicile of origin will be the same as that of its mother’s at the time when this child was born.
- A “domicile of choice” which refers to the domicile/residence other than the one of origin, acquired by a person by choice and intention for a permanent or indefinite time residence.
According to Law 119(1)/2015, a person is considered to be domiciled in Cyprus if domiciled by origin except in the following circumstances:
- This person acquired and maintains a domicile of choice outside Cyprus, provided that it has not been a Cyprus tax resident for any period of at least twenty (20) consecutive years before the tax year in question.
- This person has not been a Cyprus tax resident for a period of at least twenty (20) consecutive years immediately prior to this Law coming into effect.
Irrelevant to the domicile of origin, a person who is a Cyprus tax resident, as defined by the provisions of the Income Tax law, for seventeen (17) out of the last twenty years (20) before the tax year in question, then is considered to be domiciled in Cyprus.
It should be noted that the status domicile/non-domicile cannot be determined only by acquiring citizenship or passport. For this determination a lot of factors are being evaluated and taken into consideration by the Tax Authorities. A questionnaire should be completed and submitted to the relevant Tax Department by any such person requesting to be exempted from SDC for being non-domiciled in Cyprus.
Flow Chart for the Domicile/non-Domiciled Status