Relocation of Residence to Cyprus – “Cyprus Non-Domicile Regime”

The Cyprus Non-Domicile regime allows individuals whose place of residence is in Cyprus but who are considered non-domiciled under Cypriot law to benefit from exemptions from certain personal taxes, specifically the Special Defence Contribution (SDC).

Individuals opting for this regime must declare Cyprus as their tax jurisdiction and are exempt from Cypriot personal taxes, particularly the Special Defence Contribution, which is normally imposed on:

• Rental income (3% on 75% of rental income),

• Interest income of a non-business nature (30%), and

• Dividends from companies (17%).

This exemption applies for 17 years from the date Cyprus is declared as the individual’s tax jurisdiction. Under Cypriot law, an individual qualifies for these exemptions if they have not been a tax resident of Cyprus for at least 17 of the 20 tax years preceding the tax year of the declaration.

Recent amendments in tax legislation stipulate that individuals who choose Cyprus as their permanent residence and obtain a Cyprus Tax Identification Number are exempt from withholding tax on income derived from capital investments. This exemption applies to income sourced both in Cyprus and abroad.

The exemption applies to individuals who have not been tax residents for the last 17 out of 20 years and who choose Cyprus as their tax residence. Such individuals are entitled to the above tax benefits for the next 17 years from the date they elect Cyprus as their country of habitual residence and tax residence.