Non-Dom Regime

“Non-Domicile” Regime for individuals

In July 2015, the Ministers of Council passed a number of radical new laws aiming mainly to attract foreign investments and high-net-worth foreign individuals whilst at the same time to simplify Cyprus tax system. The amendments introduced are of utmost significance since the introduction of the current tax regime and are fully aligned with the international and EU tax and transparency requirements.

“Non-Dom” exemption rule for individuals

In accordance with the Cyprus Tax laws, an individual who is a tax resident of Cyprus under the provisions of the Income Tax Law (either under the 183 days rule or the 60 days rule) but is “non-domiciled” in the Republic of Cyprus, will be exempt from the Special Defence Contribution (SDC).

Under the SDC Law, dividends and interest income earned by individuals who are tax residents and domiciled in the Republic of Cyprus, are subject to a tax rate of 17% and 30% respectively, regardless of the source of income. Rental income is also subject to tax at the rate of 3% on 75% of the gross amount. On the other hand, under the amendments introduced in 2015, the individuals, who are tax residents but non-domiciled individuals in the Republic, can enjoy dividend, interest and rental income free from SDC tax in Cyprus.

Domiciled tax resident individual

Type of IncomeIncome TaxSDC
DividendsExemptTaxable at 17%
InterestExemptExempt
Rental IncomeTaxableTaxable at 3% on 75% of gross income

Non-Domiciled tax resident individual

Type of IncomeIncome TaxSDC
DividendsExemptExempt
InterestExemptExempt
Rental IncomeTaxableExempt

Definition of Non-Dom

The individual Cyprus tax resident will not be exempted from SDC if domiciled in Cyprus. The term “domiciled in Cyprus”, as per the provisions of the Wills and Succession Law, is when an individual is considered to have a domicile in the Republic of Cyprus either by domicile of origin (given at birth) or by domicile of choice (establishing a home with the intention to reside in Cyprus permanently or indefinitely). For the purposes of SDC, the following are exempted from the above definition (the “Non-Domiciled”)
A
An induvial who has acquired and maintained a domicile of choice outside Cyprus and is not a tax resident of Cyprus, as per the Income Tax Law, for the period of 20 or more consecutive years prior to the tax year in question.
B
An individual who has maintained his/her Cyprus domicile of origin status but was not tax resident of Cyprus for the period of 20 or more consecutive years prior the introduction of the new law i.e. before the 16th July 2015.

The 183 Day Rule

An individual is considered to be a Cyprus tax resident if he/she was physically present in Cyprus for a period, or an aggregated period, of more than 183 days during the calendar year.

The 60 Day Rule

In July 2017, the Income Tax Law was amended by adding a second tax residency test, the so-called the “60 Day Rule”. Under the “60 Day Rule”. an individual is now considered as a tax resident of Cyprus if, in the relevant tax year, he/she:
A
remains in Cyprus for at least 60 days in the year of assessment; and
B
is engaged in any business in Cyprus and/or is employed in Cyprus and/or holds an office (director) under a Cyprus tax resident company at any time during the year of assessment, provided that such is not terminated during the tax year; and
C
maintains a permanent residence in Cyprus (whether owned or rented).
The “60 Day Rule” allows an individual who in the relevant tax year (i) does not remain in any other country for more than 183 days in total, and (ii) who is not a tax resident in any other country, to be considered as a tax resident of Cyprus.

Encouraging economic activity

The introduction of the Non-Dom regime, had been widely acknowledged as the most attractive personal income tax regime in the entire tax world and it constitutes Cyprus as one of the best jurisdictions in the world as it entices high-net-worth individuals and corporate entities to take up residency in Cyprus and use Cyprus companies as part of their international tax planning.

Source https://atca.com.cy/

Frequently Asked Questions

What is the Cyprus Non-Domicile tax regime?

The Cyprus Non-Domicile regime is a special tax framework introduced in 2015 to attract foreign investors and high-net-worth individuals. It allows Cyprus tax residents who are classified as non-domiciled to benefit from significant exemptions from Special Defence Contribution (SDC), while remaining fully compliant with EU and international tax standards.

The Non-Dom regime applies to individuals who qualify as Cyprus tax residents under either the 183-day rule or the 60-day rule, but who are not considered domiciled in Cyprus under local succession and tax legislation. Eligibility depends on personal background, tax history, and residency profile.

Individuals who qualify as non-domiciled Cyprus tax residents are exempt from Special Defence Contribution on dividends, interest, and rental income. This differs from domiciled tax residents, who are subject to SDC on dividends and rental income regardless of where the income arises.

While both domiciled and non-domiciled individuals may be exempt from income tax on dividends and interest, domiciled tax residents are subject to SDC on dividends and rental income. Non-domiciled tax residents, on the other hand, are exempt from SDC on dividends, interest, and rental income, resulting in a significantly different tax outcome.

Domicile in Cyprus is determined under the Wills and Succession Law and may arise either by domicile of origin or by domicile of choice, meaning the intention to permanently or indefinitely reside in Cyprus. Certain individuals are treated as non-domiciled for SDC purposes, particularly those who were not Cyprus tax residents for extended periods prior to the introduction of the Non-Dom regime.

Yes. The Non-Dom regime applies only to individuals who are considered Cyprus tax residents, either under the standard 183-day rule or under the alternative 60-day rule. Non-residents cannot benefit from the Non-Dom exemptions.

The 60-day rule is an alternative method for establishing Cyprus tax residency. Individuals who qualify as tax residents under the 60-day rule may also benefit from the Non-Dom regime, provided they meet the non-domicile criteria and are not tax residents in another country during the same tax year.

Yes. Tax legislation, interpretations, and administrative practices may change. Individuals considering or applying the Non-Dom regime should obtain professional tax advice to confirm eligibility, ensure compliance, and assess the impact of any legislative updates.

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