Cyprus Tax Residency: Non-Domicile Status in Cyprus
Cyprus has positioned itself as one of the most appealing tax jurisdictions in the European Union, offering significant advantages to international investors and companies. With the lowest corporate tax rate in the EU, incentives for qualified employees, and numerous options to optimise the tax burden for foreign residents, Cyprus stands out as a favourable destination for business and investment.
Under Cypriot tax law, individuals who become tax residents but do not have domicile status are exempt from paying the Special Defence Contribution (SDC). This exemption applies to income from dividends, interest, and rent, making Cyprus an attractive option for those seeking to optimise their tax liabilities.
Let’s explore the key benefits of Non-Dom status and how much you could save.
Criteria for Tax Residency in Cyprus
Cyprus adopts a residency-based taxation system, with physical presence being the primary determinant of tax residency.
According to the current legislation, a stay in Cyprus for more than 183 days during a tax year (1 January to 31 December) automatically determines the tax residency of an individual.
As of 1 January 2017, Cyprus tax legislation was amended to expand the concept of tax residency. According to the new rules, an individual can be recognised as a tax resident of Cyprus even if he/she is on the island for 60 days per year.
An individual can be deemed a Cypriot tax resident if they meet the following criteria:
- Do not reside in any other country for more than 183 days in the same tax year.
- Are not a tax resident of any other country.
- Spend at least 60 days in Cyprus per year.
- Conduct business, are employed, or hold a position in a Cyprus tax-resident company.
- Maintain a permanent residence in Cyprus (owned or rented).
It is important to note that all of these conditions must be met simultaneously.
From 279,000 €
Completion in: 2026.III Total of 105 apartments
From 220,000 €
Completion in: 2025.II Total of 43 apartments
From 700,000 €
67 units in total
From 485,000 €
Completion in: 2026.III Total of 24 apartments
Calculation of Days for Cyprus Tax Residency
- The day of departure from Cyprus is counted as a day spent abroad.
- The day of arrival in Cyprus counts as a day spent in Cyprus.
- If both arrival and departure occur on the same day, it is considered a day spent in Cyprus.
- Paradoxically, if an individual leaves and returns to Cyprus on the same day, it is counted as a day spent outside Cyprus.
Non-Dom Tax Status
Non-Domicile status provides substantial tax optimisation benefits for individuals who:
- Are tax residents of Cyprus.
- Have their domicile in a country outside Cyprus.
- Have not been tax residents of Cyprus for at least 20 consecutive years.
Non-Domicile status is granted for a period of 17 years. In order to obtain the status, an application must be submitted to the Tax Department and proof that the applicant’s permanent residence is in another country.
Tax Benefits of Non-Domiciled Persons
Non-Dom status is granted for a period of 17 years and requires an application to the Tax Department, along with proof of permanent residence abroad.
Income tax | SDC | |
Dividends | no | no |
Interest | no | no |
Rental | yes | no |
Regular SDC rates for domiciled individuals include:
- 17% on dividends.
- 30% on bank deposit interest.
- 3% on rental income.
Only 80% of the declared rental income is subject to income tax, 20% is a preferential deduction.
Individuals are liable to pay income tax at a rate of between 0% and 35%. This includes any income derived from the rental of property.
Income, euros | Tax rate |
up to 19,500 | 0% |
19,501 — 28,000 | 20% |
28,001 — 36,300 | 25% |
36,301 — 60,000 | 30% |
60,001 and more | 35% |
Additional Tax Advantages in Cyprus
No Remittance Basis Taxation
Unlike Ireland and Malta, Cyprus does not tax income remitted from abroad. This allows individuals to manage and transfer capital gains globally without restriction.
Capital Gains Tax
Capital gains from the sale of shares, bonds, and other securities are not taxable.
Taxable Transactions are only gains from the sale of immovable property in Cyprus are subject to capital gains tax, which is levied at 20%.
This includes:
- Sale of property located in Cyprus.
- Sale of shares in companies owning Cypriot property (if the property exceeds 50% of the company’s value).
- Sale of rights related to immovable property, such as leases or purchase options.
Income from properties located outside Cyprus is not subject to capital gains tax, even if the seller is a Cypriot resident.
Tax Incentives for Employees
Cyprus provides generous tax relief for employees:
- Income below €19,500 per year is tax-exempt.
- A 50% tax reduction for individuals earning over €55,000 annually, applicable for up to 17 years, for first-time employees in Cyprus.
- A 20% tax reduction for new employees not qualifying for the 50% relief, valid for seven years under certain conditions.
Special Conditions for Remote Workers
Income from employment outside Cyprus, whether for non-resident companies or foreign branches of Cypriot companies, is exempt from Cypriot taxation if the work exceeds 90 days per year.
Cyprus imposes no property, gift and inheritance taxes, making it an attractive jurisdiction for wealth preservation.
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