Cyprus has become one of the most popular destinations for individuals seeking to optimize their personal tax situation within the European Union. The Cypriot tax residency regime, particularly the non-domiciled (non-dom) status, offers significant advantages.
Non-domiciled status
A person who is a tax resident of Cyprus but not domiciled in Cyprus (non-dom) is exempt from the Special Defence Contribution (SDC) on:
- Dividend income
- Interest income
- Rental income
This exemption applies for a period of 17 years from the first year of tax residency. Combined with Cyprus’s extensive network of double taxation treaties and absence of inheritance tax, this makes Cyprus particularly attractive for high-net-worth individuals.
60-day rule
Since 2017, Cyprus offers a 60-day tax residency rule (as an alternative to the traditional 183-day rule). To qualify, a person must:
- Not spend more than 183 days in any other single country.
- Spend at least 60 days in Cyprus during the tax year.
- Not be a tax resident of any other country.
- Have a permanent residence in Cyprus (owned or rented).
- Conduct business in Cyprus, be employed in Cyprus, or hold a directorship in a Cypriot company.
Practical considerations:
- Tax registration with the Tax Department is required.
- Healthcare and social insurance contributions must be addressed.
- Banking relationships may require substance documentation.
- Exit taxation in the home country must be analyzed before relocation.
Paweł Osiński
Attorney, expert in international tax planning and relocation