1. Introduction to the Cyprus Non-Dom Program
- Overview:
Launched in 2015, the Cyprus Non-Domicile (Non-Dom) Program offers unique and attractive tax incentives to individuals relocating to Cyprus while maintaining their non-domiciled status. This initiative aims to attract global talent, professionals, entrepreneurs, and high-net-worth individuals (HNWIs). - Objective:
To foster economic growth by offering an enticing tax and residency framework that positions Cyprus as a prime destination for investors and expatriates.
2. Why Choose Cyprus?
- Strategic Location:
Cyprus, located at the crossroads of Europe, Asia, and Africa, serves as a strategic hub for business, finance, and investment. Its geographic positioning allows easy access to key global markets. - Competitive Tax Regime:
Cyprus is renowned for its low and favorable tax rates, providing an attractive environment for businesses and individuals seeking tax-efficient residency options. - Residency & Tax Benefits:
The Non-Dom Program offers world-class tax advantages, making Cyprus an appealing choice for international professionals, retirees, entrepreneurs, and investors.
3. Key Features of the Cyprus Non-Dom Program
- Who Qualifies as a Non-Domiciled
Individual?
Non-domiciled status applies to individuals who:- Havenot been tax residents in Cyprusfor at least 17 out of the last 20 years.
- Wereborn outside Cyprusor have adomicile of originelsewhere (e.g., not Cypriot).
- The Non-Dom Advantage:
Non-domiciled individuals can benefit from tax exemptions on various income streams, including dividends, interest, and capital gains.
4. Tax Benefits of the Cyprus Non-Dom Program
- 1.Attractive Personal Tax Incentives:
Cyprus offers a range of tax benefits tailored to expatriates and high-net-worth individuals: -
- Exemption from taxes on dividends and interestfor non-domiciled individuals.
- No capital gains taxon shares, funds, and bonds.
- 2.Exemptions from Special Defense Contribution
(SDC):
Non-doms are exempt from SDC, which typically applies to: -
- Dividends:17% for residents.
- Interest Income:30% for residents.
- Rental Income:3% on 75% of gross rent for residents.
- 3.Income Tax Exemptions for High Earners:
-
- 50% exemptionon annual earnings over €100,000 (soon to be reduced to €50,000).
- A 10-year (soon to be 17-year) tax exemptionfor high earners who have been non-residents for at least three of the last five years.
- 4.No Wealth or Inheritance Tax:
Cyprus does not impose wealth or inheritance taxes, allowing for more favorable wealth accumulation and transfer.
6. Corporate Tax Benefits
- Low Corporate Tax Rate:
Cyprus boasts one of the lowest corporate tax rates in Europe at just12.5%, providing an advantageous environment for businesses. - Tax-Free Dividends for Non-Dom
Shareholders:
Non-doms benefit from tax-free dividends, further enhancing Cyprus as a tax-efficient jurisdiction for investors and business owners. - Double Taxation Treaties:
Cyprus has signed double taxation agreements with over60 countries, facilitating international tax planning and reducing the risk of being taxed twice on the same income.
7. Residency Rules & Flexibility
- Tax Residency Criteria:To become a tax
resident of Cyprus, individuals must meet one of the following
criteria:
- 183-Day Rule:Spend at least 183 days in Cyprus during a tax year.
- 60-Day Rule:
- Spend a minimum of 60 days in Cyprus per year.
- Maintain no residency in another country for more than 183 days.
- Have business or economic ties to Cyprus (e.g., employment or property ownership).
- Flexible Residency Options:
The 60-day rule allows for greater flexibility, making the Cyprus Non-Dom Program especially attractive to digital nomads, retirees, and individuals with flexible lifestyles.
8. Who Benefits from the Cyprus Non-Dom Program?
The program is ideal for a variety of individuals and groups, including:
- Entrepreneurs & Investors:Seeking a tax-efficient European base to manage their assets and businesses.
- High-Net-Worth Individuals (HNWIs):Aiming to minimize their tax liabilities and protect their wealth.
- Digital Nomads & Remote Workers:With flexible residency rules aligning with the modern remote working lifestyle.
- Retirees & FIRE Enthusiasts:Benefiting from tax-free foreign dividends, interest income, and a low-cost living environment.
9. Step-by-Step Application Process
To apply for the Cyprus Non-Dom status, follow these key steps:
- 1.Obtain a Residency Permit:
- Apply for a residency permit, such as the Cyprus Permanent Residency or Investment Program.
- 2.Establish Tax Residency:
- Fulfill either the 183-day rule or the 60-day rule to qualify as a tax resident.
- 3.Apply for Non-Dom Status:
- Submit application for non-domiciled status to the Cyprus Tax Department, providing necessary documentation.
10: Summary & Key Takeaways
- Cyprus Non-Dom Programis an excellent
opportunity for international investors, professionals, and
retirees seeking:
- Low taxes on income, dividends, and capital gains.
- No inheritance or wealth taxes.
- Corporate tax incentiveswith tax-free dividends for non-domiciled shareholders.
- Flexibility in residency options,with tax residency achievable via the 183-day or 60-day rule.
- Attractive for:Entrepreneurs, HNWIs, digital nomads, retirees, and anyone looking to optimize their global tax strategy.
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.