Cyprus's non-domicile regime is one of the most attractive features of the Cyprus personal tax framework for high-net-worth individuals considering relocation. Combined with Cyprus's 0% capital gains tax, generally no Cyprus withholding tax on outbound dividends, subject to applicable exceptions, and the favourable personal income tax bands introduced in 2026, non-dom status can result in a highly efficient overall personal tax position.
What Is Non-Domicile Status?
Under Cyprus law, an individual who is a Cyprus tax resident but is not domiciled in Cyprus is not subject to Special Defence Contribution (SDC — commonly referred to as GeSY in its health levy component) on dividend income and interest income. This exemption applies for 17 years from the date the individual first becomes a Cyprus tax resident — or indefinitely if they were not resident in Cyprus in the prior 20 years.
What Does the Exemption Cover?
The SDC exemption for non-domiciled Cyprus tax residents covers: dividend income received from Cyprus and foreign companies, and interest income from deposits, bonds, and similar instruments. The SDC rate that would otherwise apply to Cyprus tax residents is 17% on dividends (reduced to 5% from 2026) and 30% on interest. For non-doms, these rates are 0%.
How to Become a Cyprus Tax Resident
There are two routes to Cyprus tax residency: the 183-day rule (spending more than 183 days in Cyprus in a tax year), or the 60-day rule (spending at least 60 days in Cyprus, not residing in another country for more than 183 days, not being a tax resident of another country, maintaining a permanent home in Cyprus, and having a business activity, employment, or holding a director position in a Cyprus company). The 60-day rule is particularly useful for internationally mobile individuals.
Establishing Non-Domicile Status
Domicile for Cyprus tax purposes is determined under Cyprus law and generally follows the concept of domicile of origin. An individual is considered non-domiciled in Cyprus if: they were not born in Cyprus, their father was not domiciled in Cyprus at the time of their birth, and they have not established a domicile of choice in Cyprus by permanently settling with the intention to remain indefinitely. In practice, most foreign nationals relocating to Cyprus will qualify as non-domiciled.
Practical Planning Points
Key considerations for relocating HNWIs include: ensuring a genuine Cyprus permanent home is established, structuring investment holding arrangements to ensure dividends flow through Cyprus entities, coordinating with prior country of residence tax authorities to manage exit tax implications, aligning the timing of share disposals to benefit from Cyprus's 0% CGT regime, and reviewing trust and estate structures to ensure they remain appropriate under Cyprus law.
We advise relocating HNWIs on Cyprus tax residency, non-dom status, and personal holding structures. Contact us for a confidential initial discussion.