Cyprus Non-Dom Status: Ultimate Tax Benefits Guide
Cyprus has long been a top choice for international professionals and investors seeking a favorable tax environment. A key reason for this is the **Cyprus Non-Dom Status**, a special tax regime that provides significant tax exemptions for individuals who become tax residents of Cyprus but are not domiciled in the country. This status offers a powerful tool for tax planning, particularly for those with income from foreign sources. This guide will provide a detailed look at the tax benefits, eligibility criteria, and the process of applying for Non-Dom status in 2025. For a broader overview of the local business environment, you can read our guide on The AI-Powered Marketer: Business Adviser. You can also explore our guide on Cyprus for Expats to get a good overview of the local life.
1. Understanding Tax Residency and Domicile
To understand the Non-Dom status, you first need to understand the difference between tax residency and domicile. This is a crucial legal distinction that underpins the entire tax regime. In Cyprus, a person is considered a **tax resident** if they spend more than 183 days in the country in a tax year. The tax year is the calendar year. This is the traditional "183-day rule" found in many countries. However, Cyprus also has a more flexible "60-day rule" which we will explore in detail below. The concept of **domicile** is different. A person is considered to have a **domicile of origin** in Cyprus if they were born on the island or if their father was born in Cyprus at the time of their birth. A person can also acquire a **domicile of choice** if they have established a permanent home in Cyprus and have lived here for at least 17 out of the past 20 years. The Non-Dom status is designed for individuals who are tax residents of Cyprus but are not domiciled in the country. This is a very important distinction that has significant implications for your tax obligations. You can find more information about this in our FAQ Guides section.
2. The Ultimate Tax Benefits of Non-Dom Status
The Non-Dom status provides a number of key tax exemptions that make Cyprus a premier destination for international professionals and investors. These exemptions are a key factor in making Cyprus a tax-efficient hub for individuals, particularly for those with a high income from foreign sources.
Exemption from Special Contribution for Defence (SDC)
The most significant benefit of the Non-Dom status is the full exemption from the Special Contribution for Defence (SDC) tax. This tax is normally levied on passive income, such as dividends, interest, and rental income. For a non-domiciled tax resident, this income is fully exempt from SDC, which can lead to a huge tax saving. This exemption is not conditional on the amount of the income or the country of origin. This is a major advantage for holding companies and for those who want to be a part of the finance, banking, and investment section of the island. You can also explore our business directory for all businesses.
Capital Gains Exemption
Profits from the sale of securities, such as shares, bonds, and other financial instruments, are also exempt from taxation in Cyprus. This exemption applies to both local and foreign securities and is a major draw for investment companies and for those who want to be a part of the local financial market. This is a crucial benefit that makes Cyprus an ideal jurisdiction for a holding company or for a high-net-worth individual looking for a tax-efficient base. You can also find a suitable professional corporate services firm in our directory.
The "60-Day Rule" for Tax Residency
In addition to the 183-day rule, Cyprus also offers a "60-day rule" for tax residency. Under this rule, a person can become a tax resident of Cyprus if they spend at least 60 days in the country in a tax year, provided they meet a few other conditions. This is a great option for those who want to become a tax resident of Cyprus without spending a full 183 days in the country. For more on the local business environment, you can check out our guide on Cyprus Company Formation Requirements for Foreigners.
3. Eligibility and How to Apply
To be eligible for the Non-Dom status, you must meet a few key criteria. The most important is that you must be a tax resident of Cyprus but not be domiciled in the country. The process of applying for the status is straightforward and is typically handled by a professional corporate services provider or a lawyer. Here's a general outline of the steps:
Step 1: Become a Tax Resident
To become a tax resident of Cyprus, you must spend more than 183 days in the country in a tax year. This can be a bit of a challenge for some, but the "60-day rule" can help. Once you meet the criteria, you can apply for a tax residency certificate from the Cyprus Tax Department. This is a very important step and should be handled by a professional. You can also find a suitable accounting or auditing firm in our directory. You can also explore our guide on Costs to Set Up a Limited Company in Cyprus for more information.
Step 2: Apply for Non-Dom Status
Once you have a tax residency certificate, you can apply for Non-Dom status. The application is submitted to the Cyprus Tax Department and requires a number of documents, such as a passport, proof of address, and a birth certificate. The status is granted for a period of 17 years, and it can be renewed if you continue to meet the eligibility criteria. This is a very important step and should be handled by a professional to ensure that all the documents are in order. You can also explore our directory of all businesses on the island to find a good partner. You can also get more help on choosing a company name in our guide.
Frequently Asked Questions (FAQ)
1. Who is eligible for Cyprus Non-Dom Status?
Any individual who becomes a tax resident of Cyprus but is not domiciled in the country is eligible for Non-Dom status. This includes individuals who were not born on the island or who have not lived in the country for at least 17 out of the past 20 years. The status is primarily for individuals who want to become a tax resident of Cyprus without being subject to the Special Contribution for Defence (SDC) tax.
2. What is the difference between tax residency and domicile?
Tax residency is based on the number of days you spend in a country, while domicile is based on your permanent home and your intention to live in a country for an indefinite period. A person can be a tax resident of Cyprus without being domiciled in the country, which is the key to the Non-Dom status. For more information, you can explore our business directory of all businesses on the island.
3. What is the "60-day rule" for tax residency?
The "60-day rule" is an alternative to the traditional "183-day rule" for tax residency. A person can become a tax resident of Cyprus if they spend at least 60 days in the country in a tax year, provided they do not spend more than 183 days in any other country, are not a tax resident of any other country, and carry out a business in Cyprus. This is a great option for those who want to become a tax resident of Cyprus without spending a full 183 days in the country.
4. How long does the Non-Dom Status last?
The Non-Dom status is granted for a period of 17 years. After this period, you will be considered a domiciled tax resident of Cyprus and will be subject to the SDC tax on your passive income. The status can be renewed if you continue to meet the eligibility criteria, but it is not a lifetime status. You can find a professional to help with this in our directory of Professional Corporate Services.
5. Do I need to be a resident of Cyprus to apply for Non-Dom Status?
Yes, you must be a tax resident of Cyprus to apply for Non-Dom status. You must meet either the "183-day rule" or the "60-day rule" to be considered a tax resident. The application is submitted to the Cyprus Tax Department after you have established your tax residency on the island. For more on the local life, you can explore our guide on Cyprus for Expats.
6. What is the tax on rental income for a Non-Dom resident?
For a Non-Dom resident, rental income from properties is exempt from the Special Contribution for Defence (SDC) tax. However, the income is still subject to the standard income tax rates in Cyprus, which are progressive. The tax rates are very favorable, with the first €19,500 being tax-free. You can find a suitable accounting or auditing firm in our directory to help you with this.
7. Can I apply for Non-Dom status if I am a Cypriot citizen?
Yes, a Cypriot citizen can apply for Non-Dom status if they have established a tax residency in another country for at least 17 out of the past 20 years. The status is designed for individuals who have a domicile of origin in Cyprus but have not been a tax resident for a long time. For more on the local life, you can explore our guide on uncovering the best Cyprus villages.
8. What is the tax on dividends for a Non-Dom resident?
For a Non-Dom resident, dividend income is fully exempt from the Special Contribution for Defence (SDC) tax. This is a major benefit for those with a high income from foreign sources and for holding companies that want to pay dividends to their shareholders. The exemption is a key factor in making Cyprus a tax-efficient hub for individuals. You can also explore our business directory of all businesses on the island to find a good partner.
9. Can a Non-Dom resident still benefit from the low corporate tax rate?
Yes, a Non-Dom resident can still benefit from the low corporate tax rate of 12.5% on a company's taxable income. The corporate tax rate is a separate tax that is applicable to all resident companies in Cyprus. The Non-Dom status only applies to the individual's personal income and does not affect the company's tax obligations. You can also get more help on Cyprus Company Registration in our guide.
10. Do I need to be a professional to apply for the status?
No, you do not need to be a professional to apply for the status. The status is available to any individual who meets the tax residency and domicile criteria. However, it is highly recommended to work with a professional corporate services provider or a lawyer to assist you with the application. They can ensure that all the documents are in order and that the process runs smoothly and efficiently. You can also get more help and information on our FAQ and Guides page.
