WLN News: Non-Domicile Cyprus: Tax Residency for Individuals and Non-Domiciled Status

Introduction

Non-Domicile Cyprus:
Tax Residency for Individuals and Non-Domiciled Status

The Non-Domiciled framework has substantially strengthened Cyprus’s position as a favourable jurisdiction for international investors, entrepreneurs, and high-net-worth individuals seeking tax-efficient relocation. The regime offers significant exemptions from Special Contribution Tax (SCT) on dividends, along with a series of incentives aimed at professionals and shareholders relocating to Cyprus.

This memorandum is intended solely as a general guide and does not constitute exhaustive tax or legal advice. Individual planning must always be undertaken in light of each person’s circumstances, with tailored consultation prior to any decision or implementation.

The 60 Days Rule-Tax Residency in Cyprus

Cyprus imposes income tax on individuals who are tax residents of Cyprus based on their worldwide income.

The 60-Days Rule:
An individual can qualify as Cyprus tax resident if the following conditions are met within the relevant tax year:

1. The individual does not reside/stay in any other jurisdiction for more than 183 days; and
2. The individual is not tax resident in any other country; and
3. The individual spends at least 60 days in Cyprus; and
4. The individual carries on a business, is employed in Cyprus, or holds an office with a Cyprus tax resident company (which must continue throughout the year); and
5. The individual maintains a home in Cyprus, owned or rented.

This Rule allows internationally mobile individuals, including business executives and investors, to establish Cyprus tax residency even without significant physical presence.

Calculation of Days: For both rules, the method of calculating days spent in Cyprus is as follows:

• The day of departure is treated as a day outside Cyprus.
• The day of arrival is treated as a day in Cyprus.
• Arrival and departure on the same day counts as a day in Cyprus.
• Departure and arrival on the same day counts as a day outside Cyprus.

Individuals who relocate their tax residency to Cyprus are classified as non-domiciled for SCT purposes for a maximum period of 17 years.

Cyprus Citizenship and Tax Residency

Holding a Cypriot passport or citizenship does not automatically confer tax residency. Citizenship may facilitate certain administrative and legal matters, but an individual must still satisfy the 183-Day or 60-Day rules to be recognized as a Cyprus tax resident. Once the conditions are met, the individual can register with the Cyprus tax authorities and benefit from all the tax advantages associated with residency, including the Non-Domicile Rules discussed below.

Tax Benefits for Non-Domiciled Cyprus Tax Residents

• Full exemption from the SCT on dividend and interest income, regardless of the income’s origin.
• Rental income is no longer subject to SCT for any individual following the 2026 tax reform; however, it remains subject to income tax and General Health System (GHS) contributions.
• A 50% tax exemption applies to first employment in Cyprus where the individual was a non-tax resident for:
  (a) 10 consecutive years for employments starting 1/1/2022–29/6/2023;
  (b) 15 consecutive years for employments starting on or after 1/1/2022.
  The exemption applies for 17 years where annualremuneration exceeds €55,000.
• The previous 20% exemption (capped at €8,550) has been abolished for new entrants following the February 2026 tax reform. It has been replaced by a 25% exemption (capped at €25,000 annually) applicable for employments commencing from 2026 until 2030, provided the individual has been non-resident for at least 7 years following completion of their university degree.
• Full exemption for remuneration from services rendered outside Cyprus for more than 90 days in a tax year to a non-resident employer.
• Pensions from past employment abroad are taxed at 5% on amounts exceeding €5,000 per annum.
• Life Insurance & Provident Funds: Lump-sum payments are fully exempt.
• No Capital Gains Tax is imposed on the sale of immovable property located outside Cyprus. In addition, gains from the future disposal of Cypriot immovable property acquired on or before 31 December 2016 are also exempt from the standard 20% Capital Gains Tax.
• Gains/profits from the sale of shares and other qualifying securities are exempt, provided underlying assets do not include Cyprus immovable property.
• No inheritance, wealth, or gift tax.
• Beneficiaries are exempt on trust income consisting of interest or dividends.
• The first €22,000 of taxable income is exempt from tax. Income above this threshold is taxed at
• progressive rates of 20% to 35%, with the top rate applying to income exceeding €72,001.

Steps to Become a Cyprus Tax Resident & Non-Domiciled

• Assess Eligibility:
  Determine whether you will qualify under the 183-Day Rule or 60-Day Rule.
• Maintain Records:
  Keep detailed evidence of days spent in Cyprus (boarding passes, utility bills, lease agreements, bank statements, etc.).
• Secure Accommodation:
  Buy or rent a permanent home in Cyprus (mandatory for 60-Day Rule).
• Establish Economic Ties:
  Ensure you either work, conduct business, or hold office in a Cyprus tax resident company.
• Register with the Tax Department:
  • Apply for a Tax Identification Code (TIC);
  • Submit the Tax Residency Certificate application, if needed for proof abroad;
  • Declare non-domicile status when registering.
• Comply Annually:
  File Cyprus tax returns and pay taxes due (if any).
• Plan Ahead:
  After 17 years of Cyprus tax residency, non-domicile benefits expire – review your tax planning regularly.