Cyprus Tax

Cyprus Tax Residency and Non-Domicile Rules

Determining tax residency in Cyprus is based on the number of days spent in the country, with an amendment reducing the requirement to 60 days as of January 1, 2017. This flexibility aims to attract a diverse range of individuals, including investors, entrepreneurs, digital nomads, artists, sports professionals, crew members, foreign employees, and businesspeople not meeting residency criteria elsewhere.

Cyprus Tax Residency

To be eligible for tax residency under the 60-day rule, individuals must meet specific conditions:

  1. Not reside in any other single state for over 183 days.
  2. Not be tax resident in any other state.
  3. Engage in business activities or work in Cyprus or serve as a director in a Cyprus tax-resident company during the tax year.
  4. Maintain a permanent residence in Cyprus, either owned or rented.

Non-Domicile Tax Status:

Cyprus offers a unique Non-Dom status, providing unparalleled benefits for those relocating to Cyprus:

  • Conduct business through offshore companies, allowing flexibility and full tax exemption on profits from offshore activities.
  • Set up legal entities in Cyprus for international business, taking advantage of low corporate taxes.
  • Enjoy tax benefits such as no capital gains tax on share sales, a tax-free threshold on income, and no inheritance tax.

Advantages of Obtaining Tax Residency in Cyprus

  • Cyprus tax residents are liable for income tax on worldwide income, with the first €19,500 being tax-free.
  • Interest and dividends are subject to “defense contributions,” but non-Cyprus domiciles are exempt.
  • Flexible tax treatment for foreign pension income.
  • No capital gains tax on shares, and only real estate in Cyprus is taxable.
  • No inheritance tax in Cyprus.

Required Documents for Cyprus Tax Residence

To obtain a Cyprus tax residence certificate with Non-Domicile Status, the following documents are required
  • Passport copy
  • Bank statements for the last six months
  • Proof of income
  • Health insurance
  • Residence rental agreement
  • Yellow slip from immigration (MEU1 application form for EU Nationals)
  • Tax registration forms

Additional Non-Dom Status Information

  • Non-domiciled status is automatically granted to foreigners residing in Cyprus for 17 years.
  • Tax residents are subject to 17% and 30% tax on dividends and bank deposits.
  • Progressive tax rates apply to earnings over €60,000.
  • Various exemptions and deductions for work performed in Cyprus and other income sources.
  • Tax-free profit from the sale of Cyprus fixed property purchased before December 31, 2016.

Declaring Non-Dom Status

To be eligible for this deduction, individuals must be declared exempt by the Department of Defense. The Tax Department issues a certification of exemption for taxpayers wishing to avoid Special Defense Contributions on Interest.

For any inquiries related to tax residency, non-domicile status, or any other legal matters, we are always available to assist you on your journey to financial freedom in Cyprus.

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