Any resident of a nation who does not share the same domicile as that nation is known as a non-dom. If a person changes his/her country of residence, he does not instantly become a tax resident. In order to maintain non-domicile status in Cyprus, an individual must meet a number of requirements.
The Cyprus Non-Domiciled Tax Residency comes with a wide array of benefits.
Cyprus tax residents are considered to be Individuals who meet either the 183-day-rule, or the 60-day-rule. The 183-day-rule means an individual resides in Cyprus for one or more periods which exceed in total 183 days during a tax year. The 60-day-rule (applies from the year 2017 onwards) means that an individual complies with all the following conditions below:
- stays in Cyprus for at least 60 days (not continuously);
- does not stay for more than 183 days in another state;
- is not a tax resident of another state;
- exercises any business in Cyprus and/or renders salaried services in Cyprus and/or holds an office in a Cyprus tax resident company;
- has a permanent residence in Cyprus either owned or rented.
An individual can obtain the tax status of a Non-Domicile for the next 17 years and will be able to enjoy significant tax benefits, which are specified herein below:
- 0% Tax on dividends received;
- 0% Tax on dividends paid by the individual in Cyprus;
- 0% Tax on interest in fixed deposits/savings in Cyprus;
- The Individual will only be taxed in Cyprus on their worldwide income;
- Reduced tax on rental income;
- 50% exemption on employment income exceeding EUR100,000 per annum for non-resident managers and employees taking up employment in Cyprus upon registration of a Cyprus Foreign Interest Company, which the Firm forms and registers for its clients.
Furthermore, regardless of whether the income is derived from sources in Cyprus or not and regardless of whether it is transferred to a Cyprus bank account, a non-Dom tax resident of Cyprus will not be required to pay the Special Defense Contribution in Cyprus on any interest, rent, or dividends (whether actual or deemed).