As from 1 January 2026, a company is considered to be a Cyprus tax resident company (the “Company”) if:

(a) it is incorporated in Cyprus, unless an applicable double tax treaty provides otherwise (a company that has transferred its registered office or seat to Cyprus is deemed to have been incorporated in Cyprus); or

(b) it is not incorporated in Cyprus (nor has transferred its registered office or seat to Cyprus) but its management and control are exercised in Cyprus.

2. Notwithstanding the domestic law presumption of tax residency based on registration and incorporation in Cyprus, it remains important in practice to ensure that the Company’s management and control is exercised in Cyprus. This is because most double tax treaties determine residence based on the Company’s “place of effective management”, which broadly corresponds with the Cyprus law concept of management and control.

3. The provisions of double tax treaties must be considered on a case-by-case basis. In particular:

(a) Where a Company is considered as tax resident in both contracting states, its residence for treaty purposes is determined in accordance with the relevant tie-breaker rule in the applicable treaty;

(b) In many cases, residence is determined based on the “place of effective management” or a similar criterion. Depending on the treaty, alternative rules may also apply, including the place of incorporation or a determination by mutual agreement between the competent authorities of the contracting states.

4. Under Cyprus law, there is no statutory definition of “management and control”.

5. Nevertheless, bearing in mind the circulars issued by the Cyprus Tax Authorities on the matter, the conventional position is that the minimum requirement is for the main management body of the Company to be located and meet in Cyprus. In this respect:

(a) In cases where a Company uses the “standard” Articles of Association, under which the affairs of the Company are managed by the board of directors, it is generally accepted that the test is satisfied if the majority of the board members are tax residents of Cyprus and board meetings take place in Cyprus.

(b) However, if the Articles of Association provide for any other body to manage and control the Company, such as the shareholders or an “investment committee”, and such body is not located in Cyprus, then the Company’s tax residency would not be in Cyprus.

(c) In cases where only certain items are reserved to such other body, for example extraordinary transactions, the question of whether reserving such matters to that body transfers “management and control” to it is one of fact and degree on which it is difficult to advise with certainty.

6. In addition to the requirement that the majority of the board members are tax residents of Cyprus and that board meetings are held in Cyprus, in order to strengthen the position that the Company has its management and control in Cyprus and also bearing in mind the relevant circulars issued by the Cyprus Tax Authorities, it is advisable:

(a) for the statutory books and records of the Company to be maintained in Cyprus;

(b) for the Company not to grant any general powers of attorney to persons who are not tax residents of Cyprus;

(c) to maintain the corporate seal of the Company in Cyprus;

(d) for directors or other tax residents of Cyprus to have control over the Company’s bank accounts;

(e) to maintain the Company’s bank accounts in Cyprus, and

(f) to hold the shareholders’ meetings of the Company in Cyprus.

7. In addition to the above, and in line with guidance of the Organisation for Economic Co-operation and Development (OECD) and the European Union (EU) on corporate taxation, it is advisable for the Company to maintain an appropriate level of economic substance in Cyprus. This includes having a suitably qualified management presence capable of directing the Company’s business.

8. It should also be noted that, given that if a Company is considered a tax resident of Cyprus, this would only result in potential taxation in Cyprus, the Cyprus Tax Authorities are generally unlikely to challenge aggressively an assertion that a company is tax resident in Cyprus.

9. Accordingly, the question of what steps should be taken to ensure tax residency in Cyprus is, to a significant extent, also a matter under the laws of the country in which the Company intends to seek treaty protection, and it is therefore advisable to obtain guidance on the matter in that jurisdiction as well.

Antis Triantafyllides & Sons LLC