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For individuals considering relocation to Cyprus, securing Non-Domicile (Non-Dom) status can be a highly advantageous decision, offering substantial tax benefits. With its favorable tax regime, Cyprus has become an attractive destination for expatriates, investors, and business professionals alike. This guide outlines the process of obtaining Non-Dom status in Cyprus and highlights the numerous financial and legal advantages it confers.

What is Non-Dom Status in Cyprus?

Non-Dom status in Cyprus is a special tax residency regime designed to attract foreign individuals to establish residency on the island. Those granted Non-Dom status benefit from significant tax exemptions, making it an appealing option for entrepreneurs, high-net-worth individuals, and international investors. Non-Dom residents are exempt from certain types of taxes for up to 17 years, significantly reducing their overall tax burden.

Eligibility Requirements for Non-Dom Status in Cyprus

To qualify for Non-Dom status, an individual must meet the following criteria:

• Non-Domicile History: The applicant must not have been a tax resident of Cyprus for 17 out of the last 20 years prior to the application.
• Tax Residency Requirement: The individual must establish tax residency in Cyprus, which generally requires:
  • Spending at least 183 days in Cyprus within a calendar year, or alternatively,
  • Satisfying the “60-day rule,” which requires:
    • Spending at least 60 days in Cyprus within the tax year;
    • Not residing in any other country for more than 183 days during the same year;
    • Maintaining a permanent residence in Cyprus (either owned or rented);
    • Engaging in business activities, employment, or holding a directorship in a Cyprus-based company.

Steps to Obtain Non-Dom Status

1. Relocate to Cyprus: The first step is to physically relocate and establish residency in Cyprus. To do so, you must either purchase or lease property that will serve as your permanent residence.
2. Register as a Tax Resident: Upon relocation, you must register with the Cyprus Tax Department to become a tax resident. This process involves obtaining a Tax Identification Number (TIN) and submitting documentation proving your residency and business or employment activities in Cyprus.
3. Open a Bank Account: To facilitate financial activities, including receiving income and conducting business transactions, you will need to open a local bank account in Cyprus. This also serves as proof of your economic ties to the country.
4. Apply for Non-Dom Status: Once registered as a tax resident, you can apply for Non-Dom status through the Tax Department. This involves completing the necessary forms and providing supporting documentation, such as proof of residency and business activities.

Benefits of Non-Dom Status in Cyprus

Non-Dom status offers a variety of financial and tax-related benefits, including:

• Exemption from Tax on Dividends and Interest: Non-Doms are not subject to the Special Defence Contribution (SDC), meaning they are exempt from paying taxes on dividends, interest income, and rental income. This is particularly advantageous for investors or individuals with significant savings and passive income sources.
• Favorable Income Tax Treatment: Cyprus operates a progressive income tax system, with rates up to 35% for income over €60,000. However, Non-Dom individuals benefit from substantial income tax exemptions. For instance, employment income exceeding €100,000 per year qualifies for a 50% tax exemption for the first 10 years of employment in Cyprus.
• No Wealth or Inheritance Tax: Cyprus does not impose wealth or inheritance taxes, making it an attractive jurisdiction for estate planning and wealth management.
• Low Corporate Tax Rate: For those setting up a company in Cyprus, the corporate tax rate is 12.5%, one of the lowest within the European Union. When combined with the Non-Dom tax benefits, Cyprus becomes a particularly attractive destination for establishing business operations.
• Capital Gains Tax Relief: Non-Dom residents are exempt from paying capital gains tax on the sale or disposal of non-Cyprus assets. This is ideal for individuals with investments held internationally.

Why Choose Cyprus for Non-Dom Status?

Cyprus offers a compelling combination of a high quality of life, strategic geographic location, and a transparent, business-friendly environment. The Non-Dom regime is one of the most advantageous in Europe, allowing individuals to enjoy significant tax savings while benefiting from the country’s modern infrastructure, excellent healthcare system, and desirable climate. Additionally, Cyprus boasts a robust legal and financial services sector, where English is widely spoken, making it easier for foreign nationals to navigate the system.

How We Can Assist You

At Andreas Demetriades & Co LLC, we have extensive experience in assisting clients with obtaining Non-Dom status, acquiring property, and establishing businesses in Cyprus. Our team of seasoned legal professionals is well-versed in the intricacies of Cyprus tax and residency laws and can guide you through every step of the process. Whether you require assistance with tax registration, business incorporation, or understanding your legal obligations, we are here to help.

Final Thoughts From Our Law Firm

Acquiring Non-Dom status in Cyprus presents a strategic opportunity for individuals seeking to optimize their tax liabilities while enjoying the benefits of living in a beautiful Mediterranean country. With careful planning and expert guidance, you can maximize the advantages of this tax residency regime. If you are considering relocating to Cyprus, contact Andreas Demetriades & Co LLC today to learn how we can assist you in making this transition seamless and beneficial.

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