Becoming a Non-Domicile in Cyprus: A Comprehensive Guide
Cyprus' location between continents is as strategic as it is central. Located in the cross-section of Africa, Europe, and Asia, it enjoys a low crime rate and a luxurious way of life.
That's not why it draws in thousands of wealthy, non-domiciled residents yearly, though. Island weather might be enjoyable but less exciting than its impressively low tax jurisdiction.
As an EU member with connections in most major continents, it earned a spot on the coveted Forbes "Best Countries for Business" list. Better yet, it's made its non-domicile status attractively easy to leverage. These conditions have made the island a digital nomad's paradise.
Cyprus is the perfect base for digital entrepreneurs and HNWIs from the EU.
Suppose you are a location-independent digital entrepreneur. In that case, consider moving your primary residence to Cyprus to enjoy income tax exemptions, enabling you to build up wealth in the fast lane. The non-domicile system will give you tax exemptions on dividends and foreign income and provide access to EU health care and social security benefits.
High-net-worth individuals can relocate their tax residency and benefit from the favorable tax regimes in Cyprus, including low social insurance, exemptions of income tax, and no tax on the sale of securities, among many others.
About Cyprus ⛱️
Cyprus is drowning in sunshine and white beaches, but the island is more than its travelogue personality. Cypriot communities have a robust family tradition steeped in food culture. The nation's Mediterranean climate is almost as pleasant as its cuisine.
Cyprus tells stories of the past through its Byzantine churches and Roman mosaics, but its daily life is decidedly more delicious. Meze platters borrow from Turkish, Greek, and Middle Eastern gastronomies, so spending hours over lunch before heading out to finish a day's work is not unusual. Cyprus is one of the EU's safest countries and has a way of soothing anxieties and reminding you of the joys and passions of earthly life.
The island is situated just south of Turkey and west of Syria. It experiences mild, rain-free summers and manageable winters. It's not all sunshine and beach sand, though: Snow enthusiasts travel into the Troodos Mountains to get their fix.
Languages and flight connections 🛬
The native language in Cyprus is Greek, with a mixture of Cypriot vernacular. During the British colonization, the country adopted English, which most residents still speak fluently. The state has developed into a multilingual region, and due to the overseas graduates and the well-developed global business community, French, Turkish, and Russian are widely spoken in commerce.
The island is well-linked with other regions, allowing faster and more frequent flights. It will only take 1.5 hours by air from Athens, 5 hours from London, 3.5 from Dubai, and 4 hours from Frankfurt to Larnaca.
Within the urban areas, there is a perfect public transport network with numerous buses running on fixed routes. The buses also provide transport to significant towns, and various shuttles ferry people to both international airports in Larnaca and Paphos.
Non-Dom Program of Cyprus
The new tax legislation in Cyprus offers significant tax advantages, excellent dynamics, and concessions for Non-Dom in Cyprus. Here are several benefits that have attracted many entrepreneurs and wealthy individuals to the country.
No tax on dividends
If you are a Non-Dom and earning dividends from a domestic or foreign investment, then you are exempted from taxation.
No tax on interest
As a non-domicile, your interest income is tax-free as well. It applies to both non-dom individuals and Cyprus-registered companies.
No tax on any income abroad
The regime offers immigrants with a non-domicile status a vast range of tax exemptions on personal income, irrespective of whether it's from domestic or international dealings.
Small minimum presence requirement
To become a tax resident, you only require a 60 days presence in Cyprus, regardless of whether you fulfill this through a single period or several visits. It, therefore, opens doors to investors seeking maximum flexibility.
It's a long term security program
The Cyprus Non-Dom Program guarantees tax benefits for 17-years, facilitating long-term plans and investments.
Access to health care and social security
You can access the EU healthcare and security systems if you are a Cyprus non-domicile member.
Privacy guarantee on personal documents
As an exclusive Cyprus residence, your bank account information and tax data are safe from access by a third party.
No remittance-based taxation
The program foregoes all remittance-based taxation; therefore, you can hold, distribute, or move capital earnings internationally freely.
You can avoid income tax on your salary.
Yearly income below 19.500 € is income tax-free in Cyprus.
How to Meet the Specifications to Become a Non-Dom in Cyprus
The Cyprus non-domicile regime provides ample opportunities for high-net-worth individuals to restore their investments in a more stable and secure environment with minimal tax exposure.
Who can Benefit from the Regime?
Almost every foreign Cyprus resident can benefit from the Non-Dom system since the law doesn't impose any financial threshold or distinctions for EU and third-country nationals. However, there are several variances if you wish to obtain a visa to reside in the country based on your EU, non-EU, or financial status.
If you are a national from EU countries, you have no visa restrictions, but you must notify a migration officer once you enter the nation. If you are a third-country national, you must apply for a permanent resident permit.
New Tax Residency Rule for Individuals 🥳
According to your days on the island, you are considered a Cyprus tax resident. Based on the 183-day rule, you become a Cyprus tax resident if you are physically present in the country for 183 days in a tax year. Consequently, you become a non-Cyprus tax resident if you are physically present in the country for less than 183 days in a tax year. In January 2017, the tax residency regulations were amended into the 60-day rule. To become a Cyprus tax resident under the 60-day rule, you must meet the following requirements.
- You must remain in Cyprus for at least 60 days during a tax year.
- You must carry out business activities, get employed, or hold an office with a Cyprus tax resident company in the tax year.
- Maintain a permanent residence in Cyprus by either renting or owning a home.
Non-domicile Rules
According to the Cyprus tax laws, if an individual is a tax resident under the 183 or 60 days' rules, though he is non-domiciled, he is still exemplified from the Special defense contributions.
| Type of income | Income tax | SDC |
|---|---|---|
| Dividends | Exempt | Exempt |
| Interest | Exempt | Exempt |
| Rental Income | Taxable (normal rates) | Exempt |
If an individual remains a tax resident in Cyprus for about 17 years out of the 20 years before a tax year, he is domiciled for SDC purposes in Cyprus. A tax residence domiciled in Cyprus will be subjected to a 17% interest tax rate and 30% for dividends based on the SDC law.
The rent income will also be subjected to a 3% rate on 75% of the gross amount. Based on the Willis Rules and Succession law, domicile is defined in terms of origin received by an individual by birth. You can also acquire the domicile of choice when you establish a home with the intention of an indefinite or permanent stay.
| Type of income | Income tax | SDC |
|---|---|---|
| Dividends | Exempt | 17% |
| Interest | Exempt | 30% |
| Rental Income | Taxable (normal rates) | 3% on 75% of gross income |
Exemptions for Domiciled and Non-Domiciled Tax Residents
Based on SDC laws, an individual born in Cyprus is domiciled with exceptions of;
- Those who have obtained and maintained a domicile of choice outside Cyprus provided that he wasn't a Cyprus tax resident in 20 consecutive years preceding the tax year of assessment.
- An individual who wasn't a Cyprus tax resident for 20 consecutive years before the amendments to the SDC laws were introduced.
More Advantages of the Regime 💪
- There are no immovable property taxes.
- No inheritance and gift taxes.
- You will receive a 100% dispensation on remunerations for paid services outside Cyprus to a non-resident tax employer for over 90 days in a fiscal year.
- It offers indemnity for lump-sum reimbursement for insurance schemes.
- There is no remittance-based taxation like in Ireland and Malta.
Cyprus tax residents will remit personal income tax rates based on their earnings. For an annual income of up to € 19,500, your tax rate is 0%. For up to € 28,000, you pay a 20% income tax, and 25% for up to € 36,300. Those who earn around € 60,000 remit a 30 % tax rate and 35% for those beyond € 60001. Note that income from dividends, interests, salaries earned abroad, and profit from the sale of securities are exempt from income tax.
Domiciled Cyprus Tax Resident Individuals also get imposed on Special defence contributions. For dividends, it's at 17% and 30% for interest income, except in the Cyprus corporate and government bonds with a 3% rate. For rental income, the scale is at 2.25%. (Does not apply for Non-Domiciled Cyprus Tax Residents)
Additionally, social insurance contributions get deducted from individual emoluments in Cyprus. If you are self-employed, you should make a 16.6% contribution per your enterprise category. An employer makes an 8.8% deduction on their employees' salaries and pays them to the social insurance office on behalf of the employees. Additionally, persons obtaining income in Cyprus should contribute to the national health insurance system up to a maximum threshold of €180,000.
Concessions Available
You could still receive concessions if you were a non-tax resident in Cyprus before employment. In this case, you enjoy a 20% tax exemption on your income or €8,550 for five years. You may also have a 50% exemption if you earn more than €55,000 for five years from the commencement of employment. Overseas pensions also enjoy a 5% tax exemption if the amount exceeds €3420, but if it reaches a higher tax liability, the person can opt for ordinary taxation.
Contributions to the Social Insurance System of Cyprus
| Contribution | Rate | Cap |
|---|---|---|
| Self-employed individuals | 16,6 % | € 62.868 |
| Employee | 8,8 % | € 62.868 |
| Employer | 8,8 % | € 62.868 |
| Redundancy Fund (Employer) | 1,2 % | € 62.868 |
| Human Resource Development Authority Fund (Employer) | 0,5 % | € 62.868 |
| Social Cohesion Fund (Employer) | 2 % | no cap |
Social insurance covers every person occupying the Cyprus area, either as a self-employed or an employee. Contributions to the scheme are payable by the insured persons at a rate of 8.8% for both employer and employee. The employer has additional contributions of 2% to the cohesion fund, 1.20% to the redundancy fund, and 0.5% to the development and training fund. A self-employed individual should make a maximum or low-limit contribution depending on the venture or profession. As of 2024, social insurance contributions are charged up to a gross annual salary of 62.868 €.
EU national employees are eligible for the scheme of the member state but are limited to 24 months. They are, therefore, required to secure an A1 certificate as payment evidence for contributions to the social insurance scheme in the specific member states' offices. However, foreign nationals employed in Cyprus must remit contributions to the Social Insurance system.
NHS
The National Healthcare System (NHS) was enacted on 1st March 2019 as a universal healthcare system financed by the government, employees, and employers. Since June 2020 it offers all Cypriots access to health services, including specialists and GPs.
| Contribution | Rate |
|---|---|
| Every self-employed on his emoluments | 4 % |
| Every employee on his emoluments | 2,65 % |
| Every employer on his employee’s emoluments | 2,90 % |
| On the pension income of every pensioner | 2,65 % |
| On earning income (e.g. rent, dividends, interest, etc) | 2,65 % |
Contributions to the NHS have been revised since 1st March 2020. Each employee should contribute 2.65% of their salary, while employers contribute 2.90%. If you are self-employed, you contribute 4% of your earnings, pensioners 2.65% of their pension, 2.65% for income earners, and state officials. There will also be a state fixed fund making a 4.55% contribution to the annuity and earnings of all beneficiaries. Even if the sum of the contributor's earnings, pensions, and other income exceeds 180,000€ per year, the contribution will only be paid up to 180,000€ (cap).
Please note that this contribution also applies to dividend payments for non-dom residents.
With our net salary calculator for Cyprus residents, you can easily calculate your tax, health, and social insurance contributions.
Generally, Cyprus upholds high-quality standards of health care that includes both private and public services, but you can also opt for an international health insurance plan.
How to Apply for Non-Domicile Status in Cyprus
If you wish to relocate to Cyprus, minimize tax exposure, or even enjoy a tax-free income, you must complete an application process successfully. As an EU citizen, first, obtain a registration certificate and a yellow slip to help you reside or work in Cyprus. All individuals without a Cyprus passport must get the registration certificate from the immigration department before proceeding to the Cyprus tax authority to obtain residency.
The second step involves registering with the tax authority to receive an identification number. For these, you may need to spend at least 183 days in Cyprus and submit all your income tax return forms. After you complete your 183-day stay, you are now eligible to obtain a tax residence certificate. Finally, you will receive the tax residency certificate that financial institutions and authorities in other countries will require. After successfully registering as a Cyprus tax resident, you can now obtain a non-domicile status.
To qualify as a non-domicile in Cyprus, you must apply to the Ministry of Interior for a registration certificate. If you have already immigrated, you can ask your tax advisor for the application or select a Non-Dom-ready immigration package. You can apply for the Non-Domicile status if you are an employee, self-employed, or retired in Cyprus. As an EU citizen, you can make a formal request for your family members by providing the required documents for every member.
To obtain the Cyprus tax residence with a non-domicile status, you require various documents, which include;
- A residence rental agreement or certificate of ownership.
- A passport copy.
- Tax registration forms.
- The yellow slip from immigration.
- Paying for social insurance.
- A source of income.
- Evidence of not born in Cyprus
Easiest Way: Your Own Cyprus Limited
If you pick our Cyprus Limited Package with Non-Dom, we'll only ask you to complete an application to prove that you and your parents were not born in Cyprus.
The Non-Dom Certificate
After you complete the application and you've met all the requirements, your certificate comes with a 17-years guarantee by Cyprus and the EU.
Conclusion
Main Advantages of the Non-Dom Program 🏆
- only 60 days of presence are required
- the program is guaranteed for 17-years
- no tax on dividends
- no tax on any abroad income
- no tax on interest or crypto
The Cyprus Non-Dom program provides excellent opportunities to all investors wishing to achieve optimal tax planning for better savings. The program aims to use a far-reaching tax reform that allows more international investors and wealthy private individuals to reside in Cyprus to enhance economic development and secure a position as a jurisdiction in the global economy.
Non-dom individuals enjoy tax relief on dividends, personal income, investments, interests, and remittances. The advantageous tax regulations make Cyprus the best place to relocate to among other EU member countries.