Non Domicile “The Cyprus Particular” Tax Class – Corporate Tax

13 May 2022

CYAUSE Audit Services Ltd

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A non-dom is someone who lives in a country but does not have
the same domicile as that country. Once an individual is born in a
particular country they automatically become domiciled in that
country, someone by changing the country of his residence is not
automatically a tax resident to have the non-domicile status in
Cyprus there are several requirements.

According to the provisions of the Cyprus tax laws, an
individual who is a tax resident of Cyprus under the provisions of
the Income Tax Law (either under the 183

days rule or the 60 days rule) but is “non-domiciled”
in the Republic of Cyprus, and will be exempt from Special Defence
Contribution (SDC).

The 183-day rule for Cyprus Tax residency is for individuals who
reside 183 days in any one calendar year in Cyprus. The 60-day rule
for Cyprus Tax residency is for individuals who do not reside in
any state for more than 183 days, are not considered tax residents
in any state, reside in Cyprus for at least 60 days in a row, and
have other engagements with Cyprus.

The Social Defence Contribution law states that dividends and
interest that are 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 streaming of their income is coming
from Cyprus or abroad. The rent is also taxable at the rate of 3%
on 75% of the gross amount. The non-domiciled individuals on the
other hand will enjoy dividends, interest, and rental income
tax-free.

A person of Cyprus origin will be also treated as
”domiciled in Cyprus” for SCD purposes with the
exception of:

If residing in a different country and has obtained a Domiciled
Tax status and was not a Cyprus tax resident for at least 20
consecutive years before the tax year in question
An individual who was not a Cyprus tax resident for a period of
at least 20 consecutive years immediately before the entry into
force of the introduced provision. (before 16/07/2015)

In general, an individual who remains a tax resident of Cyprus
for at least 17 years out of the last 20 years before the tax year
in question, is considered to be domiciled for SDC
purposes.

Benefits of Non-Domicile Status

Tax Benefits of the Non–Dom Status:
100% Tax-Free Dividends
100% Tax-Free Passive Interest Income
No Special Defence Tax on Rental Income
Taxed based on Cyprus Corporation Tax on their World-Wide
income

Conditions for Non Domicile:

Cyprus wants to attract wealthy people to come and reside in
Cyprus, those people should not have been living in Cyprus for 17
out of the last 20 continuous years
They need to show that they have been living in Cyprus for more
than 60 days haven’t been living in any other country for more
than 183 days
They need to register in Cyprus as Tax residents.
They need to have a physical presence in Cyprus, they need to
show a rental agreement or buy a residential property.

The status offers an excellent opportunity for tax planning
optimization for foreigners who want to increase their savings. The
Cyprus program is a tax reform to attract more international
investors and wealthy private individuals.

Originally Published 04 April 2022

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.