A Cyprus tax resident individual is taxed on all taxable income accruing or arising from sources both within and outside Cyprus. On the other hand, a non-Cyprus tax resident individual is taxed only on taxable income accruing or arising within Cyprus.

In 2017, the Income Tax Law of Cyprus has been amended with regard to the provisions relating to the definition of tax residency of individuals in Cyprus, replacing the 183 days rule.

The new definition, which becomes effective as of 1 January 2017,  states that if an individual does not remain in any other state for a period exceeding 183 days in the year of assessment and is not tax resident in any other state for the same year of assessment, then that individual will be considered tax resident in Cyprus if all of the below conditions are met:

If the individual ceases to carry out business in Cyprus or be employed in Cyprus or hold a position to a person tax resident in Cyprus then the individual will not continue to be tax resident in Cyprus for that year of assessment.