Updated September 2026: this article was first published in May 2022. It now reflects the corporate tax residency rules in force from 1 January 2026.

How Cyprus decides where a company is tax resident

Cyprus uses two tests to decide whether a company is tax resident in Cyprus:

1. Incorporation test: from 1 January 2026, every company incorporated under Cyprus law is tax resident in Cyprus, unless a double tax treaty provides otherwise.
2. Management and control test: a company incorporated in another country is tax resident in Cyprus if it is managed and controlled from Cyprus.

Tax resident companies pay Cyprus corporate tax, at 15% from the 2026 tax year, and can use Cyprus’s network of double tax treaties.

How the rules have changed

Until December 2022, Cyprus relied only on the management and control test. A company incorporated in Cyprus but managed abroad was generally not tax resident in Cyprus.

From 31 December 2022, the law added an incorporation test. A Cyprus-incorporated company became tax resident in Cyprus even when managed abroad, but only if it was not tax resident in any other country.

The 2026 tax reform removed that last condition. Every Cyprus-incorporated company is now tax resident in Cyprus. Where another country also treats the company as resident, the double tax treaty between the two countries decides. See our 2026 tax reform overview.

What management and control means

The test comes from English common law. In De Beers Consolidated Mines Ltd v Howe [1906] AC 455, the court held that a company resides where its central management and control actually takes place. Cyprus follows the same principle.

In practice, management and control is exercised by the board of directors. Where the shareholders live does not matter. If the board meets in Cyprus and takes the company’s key strategic and financial decisions there, the company is managed and controlled from Cyprus, even if its business activities take place elsewhere.

Factors that support management and control in Cyprus

• Holding board meetings in Cyprus and taking the main decisions there
• Appointing Cyprus resident directors who are qualified and genuinely take decisions
• Renting or owning office space in Cyprus that is actually used
• Employing staff in Cyprus and registering with Social Insurance Services
• Keeping company records, such as financial statements and contracts, at the Cyprus office
• Having a Cyprus phone line, email domain and bank account
• Using Cyprus-based professional advisers
• Limiting powers of attorney to people based in Cyprus

Factors that weaken it

• A majority of directors living outside Cyprus
• Directors living in the country where the company earns its income
• Offices in Cyprus that stand empty
• Directors who lack the right experience or sit on many other boards
• Bank accounts operated from, or by people based in, another country
• Phone numbers and websites registered abroad
• Powers of attorney that let people abroad take decisions that belong to the board

These factors matter most for companies incorporated abroad that want to be Cyprus tax resident. They also matter for Cyprus companies: to claim treaty benefits, a company generally needs real substance in Cyprus, and another country may treat it as resident there if it is effectively managed from that country.

Dual residency and double tax treaties

A company can be treated as tax resident in two countries at once, for example when its directors are based in different countries. Where Cyprus has a double tax treaty with the other country, the treaty’s tie-breaker rule applies. Depending on the treaty, residence is decided either by the place of effective management or by agreement between the two tax authorities. Where there is no treaty, each country applies its own law, and the company may face tax in both.

Conclusion

Since 2026, a Cyprus-incorporated company is tax resident in Cyprus unless a treaty says otherwise. Where the company is actually managed still matters. It decides treaty tie-breakers, affects access to treaty benefits, and determines whether a foreign company is Cyprus tax resident. Companies should plan where their board meets and decides, and keep evidence of it.

This article provides general information only and is not tax advice. Please contact us for advice on your company’s position.