Cyprus is a beautiful island located in the Mediterranean Sea, between Europe and Asia. It is a member of the European Union and boasts a low crime rate, an enjoyable lifestyle, and a strategic location.
However, it’s not just these factors that make Cyprus a popular destination for wealthy individuals and Tax Nomads from around the world. The country’s Non-Dom residency program is an attraction that continues to gain popularity.
The Non-Domiciled (Non-Dom) Regime in Cyprus was introduced in 2015 as a way to make the country more appealing to foreign investors.
The program allows new tax residents (who are not considered habitual residents domiciled in Cyprus) to live and work on the island with significant tax exemptions (i.e., zero tax) on their national and worldwide income.
In this article, we explain exactly what the Non-Dom regime is and how you can benefit from its advantages for up to 17 years!
What is Cyprus’s Non-Dom regime?
The Non-Dom status is a tax benefit or exemption granted to those considered non-domiciled in the country.
In brief, a person is considered domiciled if they have that country (in this case, Cyprus) as their “ultimate destination” (they intend to spend their entire life there), or if it is where they were raised, have lived all their life, where their family resides…
Specifically, you will be considered non-domiciled if, upon becoming a tax resident in Cyprus, you meet this criterion:
You have not maintained your tax residence in Cyprus for at least 17 of the last 20 years.
Therefore, all of us who are new to the island are considered Non-Dom by default.
Moreover, by the very nature of the term, you will be considered Non-Dom for 17 years.
Note, this tax advantage is officially recognized by Cyprus and the European Union.
This is how Cyprus has become the greatest Non-Dom tax opportunity in the entire EU.
We do not know how long these conditions will continue to be granted to new tax residents, so hurry up to ensure you don’t miss out!
Advantages of the Non-Dom Regime
Okay, so you know you could be Non-Dom, but… what advantages does it give you?
The magic of Non-Dom lies in the exemption from a Cypriot tax called SDC (Special Defence Contribution).
This tax ranges from 17% to 30%, depending on whether it applies to dividends or interests.
SDC will only be mandatory for domiciled individuals, so as a Non-Dom, you won’t have to pay anything. This directly affects the dividends and interests you receive in the following way:
You will NOT pay SDC on any dividends or interests generated in Cyprus or worldwide.
You will only have to contribute 2.65% (capped at a maximum of €4,750 annually if you earn high incomes) to GESY, the country’s public health system.
Under these conditions, you can register your own company in Cyprus or have companies anywhere in the world and receive dividends at just 2.65%, with an annual maximum total of €4,750, which also gives you the direct benefit of enjoying the country’s Public Health Service and even a European Health Insurance Card!
Another point of interest is that if you receive a pension, you can bring it to Cyprus with 0% tax on the first €3,500 and a fixed 5% on everything else.
These advantages add to other tax benefits enjoyed by ALL tax residents of Cyprus (full article on tax residency in Cyprus), such as:
- 0% Gift Tax.
- 0% Inheritance Tax.
- 0% Wealth Tax.
- 0% Capital Gains Tax: Crypto, stocks, ETFs… (except on real estate within Cyprus).
- 0% Income Tax below €19,500.
- Cyprus Companies are taxed at a 12.5% Corporate Income Tax rate.
- Patent BOX regime with an effective 2.5% Corporation Tax rate.
- No exit tax on individuals.
Moreover, if you seek to pay even less tax with a business, Cyprus offers greater flexibility to create low-tax offshore companies without issues.
However, if you hold a participation of more than 50% in that company, CFC Rules could apply. The advantage is that these rules are only applicable from a turnover of €750,000.
As a result, a Non-Dom resident in Cyprus has more opportunities to operate offshore companies compared to residents of other European Union countries.
Cyprus Non-Dom status requirements
As above-mentioned, it’s 99.99% certain that you’ll meet the requirements to be Non-Dom (I don’t believe you are Cypriot by birth if you’re reading this article).
Is anything else needed?
Well, obviously to be a Non-Dom tax resident, you must first become a resident.
To do this, you can adhere to the classic 183-day rule (more than 183 days in the country per year).
Or the new 60 days rule, for which some additional requirements are necessary:
- That another country does not simultaneously claim your tax residence.
- Not exceeding 183 total days in another country per year.
- Spending a minimum of 60 days per year in Cyprus.
- Maintaining a residence at your disposal in the country (rented/purchased).
- Engaging in active work or economic activity in Cyprus or serving as a director of a company.
You can find detailed information on the 183-day and 60-day rules here.
How to apply for Non-Domiciled status in Cyprus
Are you interested in obtaining tax residency or setting up a company in Cyprus?
Or would you prefer a complete analysis of your situation to discover the best option for you?
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The Non-Dom status in Cyprus is a tax regime that enables non-domiciled individuals in Cyprus to access tax benefits, such as reduced tax rates or tax exemptions on specific sources of income worldwide (dividends, interests…).
As a Non-Dom, you will receive a tax exemption on dividends and interest received from Cyprus or anywhere in the world for 17 years under EU-signed agreements.
Additionally, you won’t pay tax on capital gains, inheritance, gifts, wealth, cryptocurrencies, stocks, ETFs, and more.
Employees, freelancers, business owners, retirees, and residents in Cyprus can apply for the Non-Dom status.
You must not have maintained tax residency in Cyprus for a minimum of 17 out of the last 20 years.
Also, you must be a tax resident before applying for Non-Dom registration.
Under the 60-day rule, you can become a tax resident with just 2 months of stay per year on the island.
Additional requirements such as having a rental contract or property, not gaining tax residency in another country, and not spending more than half a year in another state will also be necessary.
