What is the Cyprus non‑dom regime?
Cyprus offers a non‑domiciled (non‑dom) regime intended to attract new residents. A person who becomes tax resident in Cyprus and is not domiciled in Cyprus under the Wills and Succession Law may enjoy exemptions from Special Defence Contribution (SDC) on certain categories of income, notably dividends and passive interest. The regime is commonly used by internationally mobile professionals, founders, investors and retirees.
Non‑dom status is not a separate tax system. It modifies how SDC applies to specific income while normal Personal Income Tax (PIT) rules continue to apply to employment income, pensions, self‑employment income and other taxable categories.
Who qualifies and for how long?
You may be considered non‑dom if you are tax resident in Cyprus but do not have a Cyprus domicile of origin or if you were not a Cyprus tax resident for at least 17 of the previous 20 years. In practice, most new arrivals who did not previously live in Cyprus and establish tax residency now will meet the non‑dom test.
Tax residency is established under either the 183‑day or 60‑day rule, provided additional conditions are met (e.g., not resident elsewhere, maintaining a permanent residence in Cyprus, and performing business or employment in Cyprus). Choosing the right residency route should be aligned with your facts, travel pattern and documentation.
What is Special Defence Contribution (SDC)?
SDC is a separate Cyprus levy broadly applicable to Cyprus tax residents on certain classes of passive income (dividends, “passive” interest and rental income) regardless of whether that income has a Cyprus source. Standard SDC rates are commonly discussed as follows:
- Dividends — typically subject to SDC unless non‑dom exempt.
- Interest (passive) — typically subject to SDC unless non‑dom exempt.
- Rental income — subject to SDC on a portion of gross rent, in addition to PIT on net rental profits.
Separate from SDC, there is also the National Health System (NHS/GHS) contribution that can apply to various categories of income.
How non‑dom interacts with SDC
The key effect of non‑dom is the exemption from SDC on dividends and passive interest for qualifying individuals. This means that a non‑dom Cyprus tax resident may receive dividends and certain types of interest without SDC, while still considering PIT implications where relevant (e.g., active trading interest vs passive interest).
Rental income remains within the scope of SDC even for non‑doms, along with PIT on net profits. Care is required to classify interest correctly and to determine whether a distribution qualifies as a dividend for SDC purposes.
Tip: Non‑dom does not change your PIT position on employment or self‑employment income. It primarily affects SDC on specific passive income streams.
Worked examples
Example A — Investor with dividend and deposit interest
Facts: New Cyprus tax resident, qualifies as non‑dom. Receives EUR 120,000 in foreign dividends and EUR 4,000 in bank deposit interest.
Outcome: Dividend and passive interest are exempt from SDC due to non‑dom status. Consider NHS/GHS as applicable. Employment/self‑employment income remains taxed under PIT rules.
Example B — Consultant with rental income
Facts: New Cyprus tax resident, qualifies as non‑dom. Receives EUR 30,000 rental income from a property.
Outcome: SDC applies to a portion of the gross rent, and PIT applies on net rental profits after allowable deductions. Non‑dom does not switch off SDC for rental income.
Common mistakes to avoid
- Assuming non‑dom equals zero tax: Non‑dom mainly affects SDC on dividends and passive interest; PIT may still arise on other income.
- Weak evidence of residency: Keep contemporaneous records (travel, leases, employer letters). Inconsistencies can cause issues later.
- Misclassifying income: Distinguish dividends from disguised remuneration, passive from active interest, and rental income vs. trading receipts.
- Forgetting GHS/NHS contributions: Even exempt SDC categories may have GHS implications depending on the facts.
Evidence & compliance checklist
- Residency route chosen (60‑day or 183‑day) with supporting evidence
- Permanent residence and utilities evidence (where applicable)
- Employment or business presence confirmation (contracts, invoices, employer letters)
- Dividend/interest statements and classification notes
- Rental contracts, expense receipts and annual computations (if renting)
- Calendar‑based timeline of key steps and filings
Have questions about non‑dom and SDC? Share your facts — we’ll recommend a route and outline next steps.
Book a consultationFAQs
Does non‑dom eliminate all Cyprus tax?
No. Non‑dom removes SDC from dividends and passive interest for qualifying individuals. PIT still applies to employment, self‑employment and other taxable income. Rental income remains within SDC scope.
How long can I keep non‑dom status?
Subject to meeting the rules, individuals who are tax resident in Cyprus but not domiciled under the Wills and Succession Law generally maintain non‑dom for up to 17 tax years in many practical scenarios. Facts matter — assess annually.
Should I seek a ruling?
Where classification or facts are complex, a tax or VAT ruling or a longer opinion may be helpful. We prepare ruling submissions and opinion bundles when certainty is required.
Related reading: Cyprus 60‑day vs 183‑day residency • Non‑dom & SDC overview • All services