The Cyprus Non-Domicile Scheme
Who might be considered as a Cyprus Tax Resident?
183-Day Rule:
An individual who stays in the Republic of Cyprus for a period or periods exceeding in aggregate 183 days in the year of assessment.
60-Day Rule:
An individual who cumulatively satisfies the below conditions:
- Remains in the Republic for at least 60 days in the year of assessment
- Carries out any business in the Republic and/or is employed in the Republic and/or holds an office in a company resident in the Republic
- Maintains a permanent residence in the Republic which is owned or rented by him
Provided that he does not remain in any other state for more than 183 days and he is not a tax resident of any other state.
Non-Domiciled Rules
Aiming to increase the overall competitiveness and fairness of the tax system for foreign nationals, in July 2015, the Cyprus government introduced the concepts of ‘domicile’ and ‘non-domicile’ (Non-Dom) through an amendment of the Special Contribution for the Defence of the Republic of Cyprus Law of 2002.
Who are considered as Domiciled and Non-Domiciled Individuals?
An individual is domiciled in Cyprus for the purposes of Special Contribution for Defence, if he/she is:
Domiciled by origin:
Acquired at birth and generally applied to an individual with a Cypriot-domiciled father), or
Domiciled of choice:
An individual may choose and replace his/her domicile of origin and choose Cyprus. To do this they must both:
- Reside in a Cyprus; and
- Form a clear and fixed intention of making their permanent home or indefinite residence in that one country.
Non-Domiciled Status
In general, individuals can be deemed as non-domiciled if they have not been born in Cyprus (“domicile of origin” is outside of Cyprus”) or if they acquired and maintained a domicile of choice residence outside Cyprus.
It is understood that, regardless of the place of origin, any person residing in the Republic of Cyprus, as defined by the provisions of the Cyprus Income Tax Law, for at least seventeen (17) of the last twenty (20) years before the tax year, is considered a resident (domicile) in the Republic. The Cyprus Non-Domiciled Tax Status must be confirmed by the Cyprus Tax Authorities every year, which is done with the submission of a specific form.
In conclusion, an individual (non-born in Cyprus) may be a Cyprus Tax Resident under the 183-day rule or the 60-day rule, but non-domiciled in Cyprus.
What are the Non-Domicile Scheme Tax Advantages?
A Cypriot Tax resident under the 60-day or 183-day rule is subject to tax in Cyprus on his/her worldwide income. Nevertheless, a Non-Domiciled Cyprus Tax Resident may be benefited by the Non-Domiciled Scheme:
- No tax on dividend and interest income (however, such income is subject to contributions to the General Healthcare System;
- No tax on income arising from the disposal of shares, bonds and other similar financial instruments (however, this is subject to contributions to the General Healthcare System);
- Pensions paid to non-residents are subject to income tax in Cyprus, Pension received in respect of past employment outside Cyprus is taxed in Cyprus at the flat rate of 5% for amounts in excess of €3,420;
- No Capital Gains tax on income from the sale of non-Cypriot real estate;
- No inheritance tax, no wealth tax, no gift taxation.
Our services
Perfect Circle Trust Ltd (“PCT”) is the one company to rely on when in need of a highly competent services.
We work in cooperation with one of the top law firm in Cyprus – Y. Argyrides & Associates LLC and the most well-known and respected tax consultants, accounting and audit firms in the country, so that our services are well rounded, addressing every need and ready for any business scenario.
We are very experienced in providing advice and compliance services to corporate executives and high-net-worth individuals who wish to undertake residence in Cyprus and benefit from the Cyprus Non-Domiciled Tax Status. With smart planning, a qualifying non-dom individual that is resident in Cyprus for tax purposes will pay no tax on capital gains and most investment income.
Our team consists of well-trained professionals with the primary goal of making all the benefits accessible to our clients.
DISCLAIMER
This publication has been prepared as a general guide and for information purposes only. It is not a substitution for professional advice. One must not rely on it without receiving independent advice based on the particular facts of his/her own case. No responsibility can be accepted by the authors or the publishers for any loss occasioned by acting or refraining from acting on the basis of this publication.