Non-Domiciled Rules

in Cyprus

A “non-domicile” (non-dom) individual, with tax exemptions over dividends and interest earned by qualifying as “non-doms”. With this amendment, individuals who have non-dom status are no longer subject to Special Defence contribution (SDC) noting, as well, that the new law creates an attractive tax environment for non-doms residing in Cyprus. The non-dom individual may receive Dividends, Passive Interest, Royalties and Rental income without paying SDC tax. Note that for Rental Income the non-dom individual qualifies for Income Tax as all Cyprus tax payers.

 

Cyprus Tax Resident

An individual is considered a Cyprus Tax Resident, based solely on the number of days spent on the island, that is, if they are physically present on the island for 184 days or more during a calendar year; reason being it is not relevant, nor is it a condition that a Cyprus tax resident individual owns or rents accommodation in Cyprus.

A new exception to the rule applies here that a Cyprus Tax Residence can be qualify if the individual is 60 days in Cyprus and nowhere else more than 183 days.

Non-domiciled Individual Defined

 In accordance with the Wills and Succession Law, an individual can be considered as domiciled in Cyprus by way of (i) domicile of origin or (ii) by domicile of choice. That is, the domicile received by him / her at birth; or the domicile acquired or retained by him / her by own act / choice, respectively. 

  1. For the purposes of the SDC Law, a domiciled individual in Cyprus who received the status at birth, is domiciled in Cyprus with the following exemptions:

  2.  the individual was NOT a Cyprus tax resident for at least 20 consecutive years prior to the introduction of the amendment to the SDC Law.

  3. the individual has obtained and maintains a domicile of choice outside Cyprus, provided that he was NOT a Cyprus tax resident for a period of 20 consecutive years, prior the tax year of assessment.

An individual can qualify for non-dom if he is a tax payer of Cyprus no more than 17 years and maximum years to qualify is 17 years. For example, an individual is a tax payer of Cyprus from 1/1/2015 then can qualify for non-dom status up to 31/12/2032.

With the recent amendment, the SDC law will apply to an individual only if he or she is both a resident for tax purposes in Cyprus and is also domiciled in Cyprus.

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