Non-domiciled Rules in Cyprus

Non domiciled status in Cyprus offers some excellent tax advantages to minimize personal tax on worldwide income.

Definition of non-domiciled

There are two kinds of domicile:

• domicile of origin – the domicile received at birth (generally depends on the father) or
• domicile of choice – domicile acquired by establishing physical presence in a particular place and by demonstrating sufficient intention to make it the place of permanent residence
• non-domiciled – when a person has not been a tax resident of Cyprus for the last twenty years, the Cyprus Non-Domiciled Tax Status is granted. The Cyprus Non-Domiciled Tax Status must be confirmed by the Cyprus Tax Authorities every year, which is done with the submission of a specific form.

Exemption from Special Defence Contribution (SDC)

A non domiciled 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) will be exempt from Special Defence Contribution (SDC).

According to the SDC law, dividends and interest income 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 source of the income (i.e. from Cyprus or from abroad). Rental income is also subject to tax at the rate of 3% on 75% of the gross amount. Therefore, tax residents but non-domiciled individuals will enjoy dividend, interest and rental income free from SDC tax in Cyprus.

Irrespective of the domicile of origin or choice, individuals who have been tax residents in Cyprus for at least 17 out of the last 20 years prior to the tax year in question, will be deemed to be domiciled in Cyprus for the purposes of the SDC Law.