Becoming a Non-Domicile in Cyprus: A Comprehensive Guide

Cyprus’ location between continents is as strategic as it is central. Located at the cross-section of Africa, Europe, and Asia, it enjoys a low crime rate and a luxurious way of life.

That’s not why it draws in thousands of wealthy non-domiciled residents each year, though. Island weather might be enjoyable, but not as exciting as its impressively low tax jurisdiction.

As an EU member with connections in most major continents, it earned a spot on the coveted Forbes “Best Countries for Business” list. Better yet: it's made its non-domicile status attractively easy to leverage. These conditions have made the island a digital nomad's paradise. It attracts thousands of location independent businesses and digital entrepreneurs each year.

If you are a location independent digital entrepreneur, you should consider moving your main residence to Cyprus to enjoy income tax exemptions which will enable you to build up wealth in the fast lane. The non-domicile system will give you tax exemptions on dividends, foreign income and provide access to EU health care and social security benefits.

For high-net-worth individuals, you can relocate your tax residency and benefit from the favorable tax regimes in Cyprus, including low social insurance, exemptions of income tax, and high profits from the sale of securities among many.

About Cyprus ⛱️

Cyprus is drowning in sunshine and white beaches, but the island is more than its travelogue personality. Cypriot communities have a powerful family tradition steeped in food culture. The nation's Mediterranean climate is almost as pleasant as its cuisine.

Cyprus tells stories of the past through its Byzantine churches and Roman mosaics, but its daily life is decidedly more delicious. Meze platters borrow from Turkish, Greek, and Middle Eastern gastronomies, so it's not unusual to spend hours over lunch before heading out to finish a day's work. This is one of the EU’s safest countries, and has a way of soothing anxieties and reminding you of the joys and passions of earthly life.

The island is situated just south of Turkey and west of Syria. It experiences mild, rain-free summers and easy winters. It's not all sunshine and beach sand, though: Snow enthusiasts travel into the Troodos Mountains to get their fix.

Languages and flight connections 🛬

The native language in Cyprus is Greek with a mixture of Cypriot vernacular. From the British colonization period, the country adopted the English language, which most of the residents speak fluently. The state has developed into a multilingual region and due to the oversea graduates and the well-developed global business community; French, Turkish, and Russian are widely spoken in commerce.

The island is well-linked with other regions allowing faster and frequent flights. By air, it will only take you 1.5 hours from Athens, 5 hours from London, 3.5 from Dubai, and 4 hours from Frankfurt to Cyprus.

Within the urban areas, there is a perfect public transport network with numerous buses running on fixed routes. The buses also provide transport to significant towns, and various shuttles ferry people to the both international airports in Larnaca and Paphos.

Non-Dom Program of Cyprus

The new tax legislation in Cyprus offers significant tax advantages, excellent dynamics, and concessions for the non-dom Cyprus. Here are several benefits that have attracted a considerable number of entrepreneurs and wealthy individuals into the country.

No tax on dividends

If you are a non-dom earning dividends from a domestic or foreign investment, then you bare exempted from taxation.

No tax on interest

If you are a non-domicile with a fiscal Cyprus residence, then you are wholly excluded from interest income tax. It applies to both individuals and Cyprus registered companies. Additionally, your interest income is exempted from income tax irrespective of whether it's from a foreign or a local source.

No tax on any abroad income

The regime offers immigrants with the Non-Dom status a vast range of tax exemptions on personal income irrespective of whether it's from domestic or international dealings.

Small minimum presence requirement

To become a tax residence, you only require a 60 days presence in Cyprus regardless of whether you fulfill this through a single period or several visits. It, therefore, opens doors to investors seeking maximum flexibility.

It's a long term security program

The Cyprus Non-Dom program guarantees tax benefits for 17 years, which facilitates long term plans and investments.

Access to health care and social security

If you are a Cyprus non-domicile member, then you can access the EU healthcare and security systems.

Privacy guarantee on personal documents

As an exclusive Cyprus residence, your bank account information and tax data are safe from access by a third party.

No remittance based taxation

The program foregoes all remittance base taxation, and you can therefore hold, distribute, or move capital earnings internationally freely.

You can avoid salary income taxes

If you are a Non-Dom earning below 19.500 € the regime exempts you from tax entirely.

How to meet the Specifications to Become a Non-Dom in Cyprus

The Cyprus non-domicile regime aims at providing ample opportunities for high net worth individuals to restore their investments in a more stable and secure environment with minimal tax exposure.

Who can Benefit from the Regime?

Almost every foreign Cyprus resident can benefit from the Non-Dom system since the law doesn't impose any financial threshold or distinctions for EU and third-country nationals. However, there are several variances if you wish to obtain a visa to reside in the country based on your EU, non-EU, or financial status.

If you are a national from EU countries, you have no visa restrictions, but you need to notify a migration officer once you enter the nation. If you are a third-country national, then you need to apply for the permanent resident permit.

New Tax Residency Rule for Individuals 🥳

You are considered a Cyprus tax residence according to the days you spend on the island. Based on the 183 days rules, you become a Cyprus tax resident if you are physically present in the country for 183 days in a tax year. Consequently, you become a non-Cyprus tax resident if you are physically present in the country for less than 183 days in a tax year. In January 2017, the tax residency regulations got amended into the 60-day rule. To become a Cyprus tax residence under the 60 days rules, you need to meet the following requirements.

• You must remain in Cyprus for at least 60 days during a tax year.
• You need to carry out business activities, get employed, or hold an office with a Cyprus tax resident company in the tax year.
• Maintain a permanent residence in Cyprus by either renting or owning a home.

Non-domicile Rules

According to the Cyprus tax laws if an individual is a tax resident under the 183 or 60 days' rules, though he is non-domiciled, he is still exemplified from the Special defence contributions.

If an individual remains as a tax residence in Cyprus for about 17 years out of the 20 years before a tax year, then he is domiciled for SDC purposes in Cyprus. A tax residence domiciled in Cyprus will get subjected to a 17% interest tax rate and 30% for dividends based on the SDC law.

The rent incomes will also get subjected to a 3% rate on 75% of the gross amount. Based on the Willis Rules and Succession law, domicile is defined in terms of origin received by an individual by birth. You can also acquire the domicile of choice when you establish a home with the intention of an indefinite or permanent stay.

Exemptions for Domiciled and Non-domiciled tax Residents

Based on SDC laws an individual borne in Cyprus is domiciled with exceptions of;

• Those who have obtained and maintained a domicile of choice outside Cyprus provided that he wasn't a Cyprus tax resident in 20 consecutive years preceding the tax year of assessment.

• An individual who wasn't a Cyprus tax resident for 20 consecutive years before the introduced amendments on the SDC laws.

More Advantages of the Regime 💪

• There are no immovable property taxes.
• No inheritance and gift taxes.
• You will receive a 100% dispensation on remunerations for paid services outside Cyprus to a non-resident tax employer for over 90 days in a fiscal year.
• It offers indemnity for lump-sum reimbursement for insurance schemes.
• There is no remittance base taxation like in Ireland and Malta.

Personal Income tax Rates

Cyprus tax residents will remit personal income tax rates based on their earnings. For an annual income of up to € 19,500, your tax rate is 0%. For up to, € 28,000 you pay a 20% income tax, and 25% for up to € 36,300. Those who earn around € 60,000 remit a 30 % tax rate and 35% for those beyond € 60001. Note that income from dividends, interests, salaries earned abroad, and profit from the sale of securities are exempt from income tax.

Domiciled Cyprus tax residents Individuals also get imposed on Special defence contributions. For dividends, it's at 17%, and 30% for interest income, except in the Cyprus corporate and government bonds with a 3% rate. For rental income, the scale is at 2.25%. (Does not apply for non-domiciled Cyprus tax residents)

Additionally, social insurance contributions get deducted from individual emoluments in Cyprus. If you are self-employed, you should make a 15.6% contribution per your enterprise category. An employer makes an 8.3% deduction on their employees' salaries and pays them on behalf of the employees to the social insurance office. Additionally, persons obtaining income in Cyprus should contribute to the national health insurance system up to a maximum threshold of €180,000.

Concessions Available

If you were a non-tax resident in Cyprus before employment, you could still receive concessions. You can enjoy a 20% exemption on tax on your income or €8,550 for five years. You may also have a 50% exemption if you earn more than €100,000 for ten years from the commencement of employment. Overseas pensions also enjoy a 5% tax exemption if the amount exceeds €3420, but if it reaches a higher tax liability, the person can opt for ordinary taxation.

Contributions to the Social Insurance System of Cyprus

Social insurance covers every person occupying the Cyprus area either as a self-employed or an employee. Contributions to the scheme are payable by the insured persons at a rate of 8.3% for both employer and employee. The employer has additional contributions of 2% to the cohesion fund, 1.20% to the redundancy fund, 0.5% to the development and training fund. A self-employed individual should make a maximum or low limit contribution depending on the venture or profession. As of 2022, social insurance contributions are charged up to a gross annual salary of 58.080 €.

EU nationals' employees are eligible for the scheme of the member state but are limited to 24 months. They are therefore required to secure an A1 certificate as payment evidence for contributions to the social insurance scheme in the specific member states offices. However, foreign nationals employed in Cyprus have to remit contribution to the Social Insurance system.

NHS

The National Healthcare System (NHS) came into effect on 1st March 2019, as a universal health care system financed by the government, employees, and employers. It offers outpatient care services while inpatient services will be fully implemented by June 2020 so that all Cypriots can equally access health services including specialists and GPs services.

Contributions to the NHS have been revised since 1st March 2020. Each employee should contribute 2.65% of his salary while employers contribute 2.90%. If you are self-employed, you contribute 4% of your earnings, pensioners 2.65% of their pension, 2.65% for income earners, and state officials. There will also be a state fixed fund making a 4.55% contribution of the annuity and earnings of all beneficiaries. If the sum of the contributor's earnings, pensions and other income exceeds 180,000€ per year, the contribution is only to be paid on the amount of 180,000€.

Please note that this contribution also applies to dividend payments for Non-Dom residents.

You can easily calculate your tax, health and social insurance contributions with our net salary calculator for Cyprus residents.

Generally, Cyprus upholds high-quality standards of health care that includes both private and public services, but you can also opt for an international health insurance plan.

How to Apply for Non-domicile Status in Cyprus

If you wish to relocate to Cyprus and minimize tax exposure, or even enjoy a tax-free income, you need to complete an application process successfully. As an EU citizen, first, obtain a registration certificate, a yellow slip to help you reside or work in Cyprus. Note that all individuals without a Cyprus passport will need to get the registration certificate from the immigration department before proceeding to the Cyprus tax authority to obtain residency.

The second step involves registering with the tax authority to receive an identification number. For these, you may need to spend at least 183 days in Cyprus and submit all your income tax return forms. After you complete your 183 days stay, you are now eligible to obtain a tax residence certificate. Finally, you will receive the tax residency certificate that will be required by financial institutions and authorities in other countries. After you successfully register as a Cyprus tax residence, you can now obtain a non-domicile status.

Easiest Way: Your Own Cyprus Limited

To qualify as a non-domicile in Cyprus, you need to fill an application at the Ministry of Interior for a registration certificate. If you had already immigrated, you can ask your tax advisor for the application or select a Non-Dom ready immigration package. You can apply for the Non-Domicile status if you an employee, self-employed, retired, or a visitor in Cyprus. As an EU citizen, you can make a formal request for your family members by providing the required documents for every member.

To obtain the Cyprus tax residence with a non-domicile status, you require various documents which include;

1. A residence rental agreement or certificate of ownership.
2. A passport copy.
3. Tax registration forms.
4. The yellow slip from immigration.
5. Paying for social insurance.
6. A source of income.
7. Evidence of not born in Cyprus

If you picked our Cyprus Limited Package with Non-Dom, we'll only ask you to fill out an application to proof that you and your parents are not born in Cyprus.

The Non-Dom Certificate

After you complete the application and you've met all the requirements, your certificate comes with a 17 years guarantee by Cyprus and the EU.

Conclusion

Main Advantages of the Non-Dom Program 🏆

• only 60 days of presence are required
• the program is guaranteed for 17 years
• no tax on dividends
• no tax on any abroad income
• no tax on interest or crypto

The Cyprus Non-Dom program provides excellent opportunities to all investors' who wish to achieve optimal tax planning for better savings. The program's goal is to use a far-reaching tax reform that allows more international investors and wealthy private individuals to reside in Cyprus to enhance economic development and secure a position as a jurisdiction in the global economy.

Non-Dom individuals enjoy tax relief on dividends, personal income, investments, interests, and remittance. The advantageous tax regulations make Cyprus the best place to relocate to among other EU member countries.

Adam