Cyprus Tax Residency Certificate & Non-Dom Status: Expert Guidance for Strategic Planning

Choosing Cyprus as a hub for international business can offer entrepreneurs and professionals significant tax benefits. In this article, we’ll provide a quick guide to the Cypriot tax residency certificate and non-dom (non-domicile) status. From outlining the advantages to explaining the process, we’ll help you understand how to make the most of Cyprus’s favourable tax environment.

Tax Residency Certificate in Cyprus

As of 2017, an individual is a tax resident of Cyprus if one satisfies either the ‘183-day rule’ or the ’60-day rule’ for the tax year. For earlier tax years only, the ‘183-day rule’ is relevant for determining Cyprus tax residency.

The 183 days rule 

Cyprus employs a straightforward criterion for determining tax residency and non-dom status, primarily based on the number of days an individual spends on the island within a given tax year. 

The ‘183-day rule’ for Cyprus tax residency is satisfied for individuals who are physically present in the Republic for more than 183 days in any one calendar (1st of January to 31st of December), without any further additional conditions/criteria being relevant.

The 60 days rule  

The ’60-day rule’ for Cyprus tax residency is satisfied for individuals who, cumulatively, in the relevant tax year:

• does not reside in any other country for a period exceeding 183 days in aggregate and 
• is not considered to be a tax resident in any other country and 
• resides in Cyprus for at least 60 days within a tax year and
• is engaged in any business in Cyprus and/or is employed in Cyprus and/or holds an office (director) under a Cyprus tax resident Company at any time during the year of assessment , provided that such is not terminated during the tax year and 
• maintains a permanent home in Cyprus (either owned or rented) 

For the purposes of both the ‘183-day rule’ and the ’60-day rule’, days in and out of Cyprus are calculated as follows:

• the day of departure from Cyprus counts as a day of residence outside Cyprus
• the day of arrival in Cyprus counts as a day of residence in Cyprus
• arrival and departure from Cyprus in the same day counts as one day of residence in Cyprus, and
• departure and arrival in Cyprus in the same day counts as one day of residence outside Cyprus.

Tax Residency According to Cyprus Laws

According to the provisions of the Cypriot tax laws, an individual who is tax resident of Cyprus under the provisions of the 183 days rule or the 60 days rule but is non domiciled in the Republic, will be exempt from the Special Defense Contribution.

As per the Special Defense Contribution law, dividends and interest income earned by individuals who are tax residents and domiciled in Cyprus, are subject to tax at the rate of 17% and 30% respectively, regardless of the source of the income ( i.e from Cyprus or from abroad). Rental income is also subject to tax at the rate of 3% on 75% of the gross amount.  

Therefore, Cypriot tax residents but non domiciled individuals ( non – dom ) will enjoy the following exemptions from the Special Defense Contribution:

• dividend income from Cyprus and non-Cyprus tax resident companies
• interest income from Cyprus or abroad 
• Rental Income from Cyprus of abroad 

The following table outlines the taxation differences between non-domiciled tax residents and domiciled tax residents in Cyprus under the SDC tax

Irrespective of the domicile of origin, an individual who remains a Cypriot tax resident for a period of at least 17 years out of the last 20 years prior to the tax year in question, shall be deemed as domiciled in Cyprus for SDC purposes.

As you embark on establishing tax residency in Cyprus and potentially exploring the non-dom status, our professional team of Lawyers is dedicated to provide you with expert guidance tailored to your specific requirements to ensure a seamless transition.