Cyprus Non-Domicile Individuals
The non-domiciled tax status entitles to tax-free receipt of dividends. Do you qualify?
The Cyprus Non-Domiciled Tax Status
An individual enjoys the Cyprus Non-Domiciled Status if he/she is tax resident of Cyprus and has not been a tax resident of Cyprus as per the Income Tax Law for a period of 20 consecutive years prior to the introduction of the law (i.e. prior to 16 July 2015).
An individual is considered to be a resident for tax purposes of Cyprus if he/she is physically present in Cyprus for a period or periods exceeding in aggregate 183 days during a calendar year or 60 days (under the ’60-day rule’), maintains a permanent residential property (either owned or rented), does not reside in an other state for a period exceeding 183 days in aggregate and has other defined Cyprus ties (for more info please visit our respective page).
When a person has not been a tax resident of Cyprus for the last twenty years, the Cyprus Non-Domiciled Tax Status is granted, 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.
The Cyprus Non-Domiciled Tax Status provides a number of tax advantages, mainly the exemption from capital gain tax on income from dividends and interest.
The Cyprus Non-Domiciled Tax Status – Tax Advantages
- A non-dom earning dividend income, from foreign as well as local investments will not be subject to Special Defence Contribution (“SDC”; which is the “capital gain tax of Cyprus) in the amount of 17% as of 16 July 2015.
In addition, dividend income is unconditionally exempt from Income Tax. Therefore, the tax payable by a Cyprus resident non-dom on dividend income will be zero.
- Interest: A non-dom earning interest income, from foreign as well as local sources, will not be subject to SDC in the amount of 30% as of 16 July 2015. In addition, interest income is also exempt from Income Tax. Therefore, the tax payable by a Cyprus resident non-dom on interest income will be zero.
- Rental income: A non-dom earning rental income, from properties in Cyprus or abroad, will not be subject to SDC in the amount of 3% as of 16 July 2015. Rental income will only be subject to Income Tax at the normal rates (following a 20% allowance).