NON-DOMICILED TAX STATUS
Cyprus Non-Domiciled Tax Rules for Individuals
An individual who is considered a tax resident of Cyprus under the terms of the Income Tax Law (either the 183 days rule or the 60 days rule) but who is "non-domiciled" in the Republic of Cyprus is free from the Special Defense Contribution (SDC). Dividend and interest income generated by people who are tax residents and domiciled in Cyprus are liable to tax at rates of 17% and 30% , respectively under the SDC legislation (i.e. from Cyprus or from abroad).Therefore, persons who are tax residents but not domiciled in Cyprus will not be subjected to the Special Dependents Tax on dividends, interest, and rental income. According to the new standards, the residence is defined in line with the Wills and Succession Law:
- A place of origin (i.e., the place where a person was born); and,
- A domicile of choice, or the domicile a person establishes after moving into a place with the purpose of staying there permanently or indefinitely.
For the purposes of the SCD, a person who has a domicile of origin in Cyprus shall be regarded as "domiciled in Cyprus," with the exception of:
- Someone who is not a Cyprus tax resident for at least the 20 years preceding the tax year in issue, such as someone who has secured and maintained a domicile of choice outside of Cyprus in accordance with the Wills and Succession Law;
- A person who has not been a Cypriot tax resident for at least 20 continuous years preceding the implementation of the new rules (16 July 2015).
If an individual is a taxpaying resident in Cyprus for the past two decades, at the very least 17 of them, he or she is considered to have their primary residence in Cyprus for the purposes of the SDC.
Individual who meets the requirements to be considered a tax domicile in Cyprus
| Income Type | Income Tax | SDC |
|---|---|---|
| Dividends | Exempt | Taxable -17% |
| Interest | Exempt | Taxable -30% |
| Rental Income | Taxable(Normal rates) | Taxable at 3% on 75% of gross income |
Individual who is a non-domiciled tax resident in Cyprus
| Income Type | Income Tax | SDC |
|---|---|---|
| Dividends | Exempt | Exempt |
| Interest | Exempt | Exempt |
| Rental Income | Taxable(Normal rates) | Exempt |
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