Cyprus is once again working to improve its economic desirability and will be able to increase its alternative business base for Russians with good creditworthiness.
It is no secret for anyone that this year, the result of the Russian deoffshorisation initiative was the reason for the migration of taxes for wealthy Russians and official representatives of the innovative sector in favour of lower tax jurisdictions.
This happened, only because of the careless Russian tax policy that deterred people interested in working with real Western capital from their country of origin. More importantly, the role was played by threatening private capital proposals from the Ministry of Finance in Russia regarding adjusting the rules for determining the residence of the Russian currency for individuals.
Recently, the Finance Committee in Cyprus discussed the long-awaited and somewhat revolutionary new competition law that allows foreign individuals to have the possibility of obtaining Cyprus tax resident status while on the island only for 60 days in any calendar year. A prerequisite for this is, is that the person should stay no longer than 183 days in any tax year in a foreign country.
At the present time, “a Cyprus resident” in relation to a natural person is a person who resides in Cyprus for a period which in the aggregate exceeds 183 days in a tax year. As stated in the bill, provided that the person does not remain for a period or periods exceeding 183 days in the tax year in any other country outside of the Republic, can choose to become a resident of the Republic as long as they can meet one of the following conditions:
(a) Must reside in the country during the current fiscal year and in the immediately preceding fiscal year for one or more periods exceeding 210 days, of which 90 days stay in the country for at least account for the current tax year, or (b) can satisfy a combination of the following conditions:
- Remains in the country at least 60 days in the current tax year. Or,
- Conducts business, employment, or has contributed to the Cyprus economy during the current fiscal year.
In order to conduct legitimate business in Cyprus, individuals must own a company that employs staff on the island, or as a minimum, hold an official office address. Individuals must also own their own property in order to constitute permanent residence.
The Cyprus Ministry of Finance noted that the deoffshorisation bill was a step in the right direction and was permitted to help clarify the concept of tax residency in the Republic.
Cyprus remains to be an excellent alternative business base for those interested in Russian companies in good standing, however, the preservation centre of vital interests in Russia could become a major catch even for those Russians who withdrew from the registration of residency, in case of the potential introduction of the Russian tax residency changes in 2019. Even then, only Russians obtaining citizenship in Cyprus will be able to protect it from possible aggressive new tax laws or requirements of Russian confederates, and later law enforcement officers.