Non-domicile Status

Tax Advice & Tax Compliance

Non-domicile Status

Non-domiciled tax status in Cyprus

In the year 2015, the House of Representatives voted as a law the non-domiciled tax status for individuals. This law came into force as from 16 July 2015 and provides for exemption of non-domiciled but tax resident individuals in Cyprus from the Special Defense Contribution (SDC). Prior this law, all the Cyprus tax residents were automatically subject to SDC.

The Special Defense Contribution is imposed on the following types of income:

  1. 75% of the rental income is subject to 3% SDC.
  2. 17% SDC on dividends income from both local and overseas sources.
  3. 30% on passive interest income i.e. the income that does not relate or closely relate to the ordinary activities.

In general, an individual is domiciled in Cyprus if he/she was Cyprus tax resident 17 out of the previous 20 years. This means, that an overseas individual who is moving in Cyprus for the first time in the year 2017 will exempt from SDC for the first 17 tax years from the year of moving in Cyprus and he will be subject to SDC from the 18 year and onwards i.e. from the year 2035. Domiciled can also be obtained by way of origin or choice.

An individual is a tax resident of Cyprus if he/she physically spends more than 183 days in Cyprus within a tax year. Therefore, in order to enjoy the exemption from SDC presupposes that the individual moves physically in Cyprus and obtains the tax residency in Cyprus. This means, that the individual should register for tax purposes and obtain TIC (Tax Identification Code). It is also recommended to request tax residence certificate in order to prove that he is indeed tax resident of Cyprus and thus he/she will be able to enjoy reduced withholding tax rates or nil withholding tax rates for income from overseas sources in accordance with the relevant Double Taxation treaties concluded between Cyprus and the source States. 

A foreign individual moving to Cyprus can obtain the status of non-domiciled provided that he/she properly completes and submits to the Tax Authorities the Tax Forms T.D. 38, T.D. 38QA and T.D. 38QB. The declaration T.D. 38 is the declaration of individual for exemption as non-domiciled.

The declaration T.D. 38QA is the questionnaire to determine domicile of origin. The declaration T.D. 38QB is the questionnaire to determine domicile of choice.

Once the declarations are submitted to the Tax department, reviewed and, if accepted, the tax commissioner issues an official confirmation letter confirming or not the non-domiciled Cyprus status for the applicant. The Tax department may request additional information and/or documentation to support its decision.

Our office can assist you in the proper completion – submission of the tax declarations and to represent you in the Tax Authorities. Also, our office will consult you on the documentation necessary to have at hand and present to the Tax authorities upon request.

Practical uses of the non – dom incentive

Who can use this incentive

This incentive can be used by the following individuals:

  • An individual who has his domicile of origin in Cyprus and he has not obtained a domicile of choice in another country provided he has not been a tax resident of Cyprus during the last 20 years before this law came into effect and subsequently, he becomes tax resident of Cyprus.
  • An individual who had his domicile of origin in Cyprus, but has obtained a domicile of choice in another country and has not been a tax resident of Cyprus during the 20 years before he becomes tax resident of Cyprus.
  • An individual who has his domicile of origin in a country other than Cyprus provided he has not been tax resident of Cyprus during the 17 out of the last 20 year.

For more information and/or advice, feel free to contact us via email at [email protected]

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