ARTICLE · 24 DECEMBER 2020

Tax Residency – PE Risks – Covid-19

Ernst & Young Cyprus Ltd

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The TD has indicated that although such guidance is not binding, the intention of the TD is to follow such guidance as deemed appropriate.

CyprusTax

Philippos Raptopoulos

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As a result of the Covid-19 pandemic, special measures have been taken at a global level, including restrictions on travelling, compulsory self-isolation, working from home and the suspension of employment. Such measures restrict the physical presence of individuals at their place of work.

It is within this context that the Cypriot Tax Department ("TD") issued on 27th of October 2020, Circular 4/2020 ("Circular") which relates to the implementation of the provisions on tax residency and permanent establishment in accordance with article 2 of the Income Tax Law, aiming to provide guidance to taxpayers with regards to the potential impact of such special measures on the tax residency status of individuals and companies as well as on the permanent establishment status of businesses.

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