Cyprus Non-Domicile Individuals
(Non-Dom)
The non-domiciled tax status entitles to tax-free receipt of dividends. Do you qualify?
The Cyprus Non-Domiciled Tax Status
No Tax Liability on Dividends and Interest Income in Cyprus
While many high-tax countries further increase their capital gain and taxes on dividends and even extend tax liability to unrealised income, Cyprus provides tax exemption on income from dividends and income received for a period of 17 years.
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).