Tax Residency and Non-Domicile Status in Cyprus
Cyprus has become one of the most attractive jurisdictions in Europe for individuals and businesses seeking a favourable tax regime. Discover how Cyprus's flexible tax residency rules and non-domicile regime create powerful advantages.
Tax Residency
Flexible Tax Regime
Tax Residency Rules in Cyprus
Cyprus's tax system is based on the principle of residence, with individuals qualifying as tax residents under either the 183-day rule or the 60-day rule.
The 183-Day Rule
An individual is considered a tax resident if they spend more than 183 days in Cyprus during a given tax year (1 January to 31 December).
- Tax year runs from 1 January to 31 December
- More than 183 days = tax resident
- Fewer than 183 days = non-resident (unless 60-day rule applies)
The 60-Day Rule
Introduced in 2017, this rule allows individuals to qualify as Cyprus tax residents with just 60 days of presence, provided certain conditions are met.
- Spend at least 60 days in Cyprus during tax year
- Not tax resident in any other jurisdiction
- Conduct business, be employed, or serve as director in Cyprus company
- Maintain permanent residence in Cyprus (owned or rented)
Calculation of Days
For clarity, the law specifies how days are calculated for tax residency purposes.
Days Counted as Residence:
- Day of arrival in Cyprus
- Both arrival and departure on same day
Days Counted as Non-Residence:
- Day of departure from Cyprus
- Depart and re-enter Cyprus on same day
Taxation of Residents and Non-Residents
Tax Residents
- Taxed on worldwide income (subject to exemptions)
- Benefit from extensive double taxation treaty network
- Progressive income tax rates (20% to 35%)
- First €19,500 of taxable income exempt
Non-Residents
- Only taxed on income sourced within Cyprus
- Limited access to double taxation treaties
- Subject to withholding tax on Cyprus-sourced income
Domicile and Non-Domicile Status
Non-domiciled residents enjoy significant tax benefits, particularly exemption from the Special Defence Contribution (SDC) on dividends and interest.
Domicile Determination
- Domicile of origin acquired at birth
- Domicile of choice by establishing permanent residence
- Automatic domicile after 17 years of tax residency
Non-Domiciled Benefits
- Exempt from SDC on dividends
- Exempt from SDC on passive interest
- Exempt from SDC on certain rental income
- Highly attractive for investment income
Key Tax Advantages of Cyprus Residency
No Wealth Tax
No wealth tax, inheritance tax, or gift tax in Cyprus
Securities Exemption
Exemption on profits from disposal of securities, including shares, bonds, and debentures
Foreign Employment
Exemptions on foreign-sourced employment income when employment abroad exceeds 90 days
Pension Benefits
Preferential treatment of pensions, taxed at flat rate of 5% on amounts above €3,420 annually
Employment Incentives
Temporary exemptions for individuals relocating to Cyprus for employment
EU Membership
EU membership and favourable geographical position for wealth planning and international business
Professional Guidance and Support
At Psavvides Law Office, we provide comprehensive advice on all aspects of Cyprus taxation:
Assessing eligibility under the 60-day and 183-day residency rules
Preparing and submitting applications for non-dom status
Structuring worldwide income for optimal tax efficiency
Assisting with registrations before the Cyprus Tax Department and other relevant authorities
Support with permanent residency applications
Company formation and tax planning tailored to personal and professional goals
Ready to Optimize Your Tax Position?
Our experienced tax lawyers can help you structure your affairs to maximise the benefits of Cyprus's favourable tax regime while ensuring full compliance with local obligations. Contact us today for expert guidance on your tax residency strategy.