NON-DOMICILED TAX STATUS
Cyprus Non-Domiciled Tax Rules for Individuals
An individual who is considered a tax resident of Cyprus under the provisions of the Income Tax Law (either under the 183-Day Rule or the 60-Day Rule) but who is non-domiciled in the Republic of Cyprus is exempt from the Special Defence Contribution (SDC).Dividend and interest income earned by individuals who are both tax residents and domiciled in Cyprus are subject to SDC at rates of 17% and 30%, respectively — whether the income is generated in Cyprus or abroad.
Therefore, individuals who are tax residents but not domiciled in Cyprus are not subject to SDC on dividends, interest, or rental income. Domicile status is determined according to the Wills and Succession Law, which recognises:
A domicile of origin (typically the place of birth); and
A domicile of choice, acquired by establishing permanent or indefinite residence in another jurisdiction.
- 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.
Tax Resident Domiciled 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 |
Non-Domiciled Tax Resident
| Income Type | Income Tax | SDC |
|---|---|---|
| Dividends | Exempt | Exempt |
| Interest | Exempt | Exempt |
| Rental Income | Taxable(Normal rates) | Exempt |
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