Non Domicile "The Cyprus Special" Tax Category

A non-dom is someone who lives in a country but does not have the same domicile as that country. Once an individual is born in a particular country they automatically become domiciled in that country, someone by changing the country of his residence is not automatically a tax resident to have the non-domicile status in Cyprus there are several requirements. 

According to the provisions of 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, and will be exempt from Special Defence Contribution (SDC).

The 183-day rule for Cyprus Tax residency is for individuals who reside 183 days in any one calendar year in Cyprus. The 60-day rule for Cyprus Tax residency is for individuals who do not reside in any state for more than 183 days, are not considered tax residents in any state, reside in Cyprus for at least 60 days in a row, and have other engagements with Cyprus. 

The Social Defence Contribution law states that dividends and interest that are earned by individuals who are tax residents and domiciled in Cyprus, are subject to tax at the rate of 17% and 30% respectively regardless of the streaming of their income is coming from Cyprus or abroad. The rent is also taxable at the rate of 3% on 75% of the gross amount. The non-domiciled individuals on the other hand will enjoy dividends, interest, and rental income tax-free.  

A person of Cyprus origin will be also treated as ‘’domiciled in Cyprus’’ for SCD purposes with the exception of:

1. If residing in a different country and has obtained a Domiciled Tax status  and was not a Cyprus tax resident for at least 20 consecutive years before the tax year in question

2. An individual who was not a Cyprus tax resident for a period of at least 20 consecutive years immediately before the entry into force of the introduced provision. (before 16/07/2015)

In general, an individual who remains a tax resident of Cyprus for at least 17 years out of the last 20 years before the tax year in question, is considered to be domiciled for SDC purposes. 

Benefits of Non-Domicile Status

• Tax Benefits of the Non–Dom Status:

• 100% Tax-Free Dividends

• 100% Tax-Free Passive Interest Income

• No Special Defence Tax on Rental Income

• Taxed based on Cyprus Corporation Tax on their World-Wide income

Conditions for Non Domicile:

1. Cyprus wants to attract wealthy people to come and reside in Cyprus, those people should not have been living in Cyprus for 17 out of the last 20 continuous years

2. They need to show that they have been living in Cyprus for more than 60 days haven’t been living in any other country for more than 183 days 

3. They need to register in Cyprus as Tax residents. 

4. They need to have a physical presence in Cyprus, they need to show a rental agreement or buy a residential property. 

The status offers an excellent opportunity for tax planning optimization for foreigners who want to increase their savings. The Cyprus program is a tax reform to attract more international investors and wealthy private individuals.

For more information and assistance on becoming a Cyprus Tax Resident, contact our expert team at CYAUSE Audit Services.