Non-Domiciled Status in Cyprus: Legal Insight into Residency, Compliance & Strategic Structuring
Cyprus is a strategic location for international business and high-net-worth individuals HNWI. In 2015, the introduction of the Non-Domiciled (Non-Dom) status further cemented this appeal, offering a highly attractive tax regime designed to attract affluent individuals and investors from abroad. While the headline tax benefits are widely known, understanding the underlying legal definitions, practical implications, and potential future considerations is crucial for anyone contemplating a move to the island.
What is Non-Dom Status?
The Non-Dom status in Cyprus is a favorable tax regime for tax residents of Cyprus who do not have a Cypriot domicile.
An individual is considered to have a Cypriot domicile if they:
• Were born in Cyprus and one of their parents had a Cypriot domicile.
• Have been a tax resident of Cyprus for at least 17 out of the last 20 years.
Therefore, individuals moving to Cyprus who do not meet the above criteria can be classified as Non-Doms.
Significant Tax Advantages for Non-Doms
A person who is a tax resident of Cyprus but holds Non-Dom status enjoys substantial tax exemptions, particularly concerning passive income:
• Zero taxation on Interest Income (17% Special Contribution for Defence exemption).
• Zero taxation on Dividend Income (17% Special Contribution for Defence exemption).
• Zero Special Contribution for Defence (SCD) on investment income.
• Exemption from tax on wealth or worldwide income, with only Cyprus-sourced income remaining subject to local taxation.
• No Tax on sale of shares & other “titles”.
• No inheritance tax, no wealth tax, no gift taxation.
Conditions for Obtaining Non-Dom Status in Cyprus
To qualify for Non-Dom status, an individual must meet the following criteria:
1. Transfer their tax residency to Cyprus (by spending at least 183 days in Cyprus, or meeting the “60-Day Rule” criteria). More specifically:
• An individual is considered a Cyprus tax resident if they spend at least 183 days in Cyprus during a calendar year, irrespective of any other conditions.
This is the most straightforward test and applies to individuals who reside in Cyprus for the majority of the year.
60-Day Rule
Introduced in 2017, this rule provides a more flexible route to Cyprus tax residency, particularly attractive for internationally mobile individuals and entrepreneurs. To qualify under this rule, all of the following conditions must be met cumulatively:
• Spend at least 60 days in Cyprus in the relevant tax year.
• Do not reside in any other single country for more than 183 days in that same tax year.
• Carry out business activities, be employed in Cyprus, or hold a directorship in a Cyprus tax-resident company at any time during the years should be an employee of a Cyprus company and pay social insurance.
• Maintain a permanent residential property in Cyprus which is either owned or rented throughout the year by himself.
2. Has not been a tax resident of Cyprus for at least 17 out of the previous 20 years.
The Non-Dom status is valid for 17 years from the date an individual becomes a tax resident of Cyprus.
Combining Non-Dom Status with International Trusts
Cyprus boasts one of the most flexible and robust regimes for International Trusts, offering complete tax transparency and no local taxation on offshore trust income.
• Non-Doms can be either beneficiaries or settlors of these trusts, benefiting from the non-taxation of the trust’s income in Cyprus.
The Cyprus Non-Dom regime remains one of the most attractive tax frameworks within the EU, offering clear benefits for individuals seeking a tax-efficient base for personal and investment income. However, these advantages come with legal conditions, compliance obligations, and long-term strategic considerations that cannot be overlooked. Careful planning, timely advice, and ongoing legal support are essential to fully unlock the benefits of the Non-Dom regime while avoiding unexpected exposures. For those contemplating a move to Cyprus or restructuring their tax residency, informed legal guidance is not optional but essential.
Considering a move to Cyprus or rethinking your current tax arrangements? Our team of experienced legal professionals can provide tailored advice to ensure you maximize the benefits of the Non-Dom status while navigating its intricacies. For further information on this topic please contact AMG MYLONAS & ASSOCIATES LLC by telephone +357 25101080 or via email [email protected].
We look forward to meeting you in person when in Cyprus next! Please get in touch.
The information provided by Mylonas Law is for general informational purposes only. It does not constitute or should not be read as a legal or tax advice. You should not act or refrain from acting based on any information provided above without obtaining legal or other professional advice. No responsibility can be accepted by the authors or the publishers for any loss occasioned by acting or refraining from acting on the basis of this publication.