The Cyprus non-domicile scheme


In an effort to enhance the competiveness,fairness and simplicity of the Cyprus tax system and to make it more attractive to foreign investors, the Cyprus Government passed on 9th July 2015, among others, the “Domicile” concept. The introduction of the non-domicile rules aims to attract high-earners to relocate to Cyprus, by using Cyprus as a business centre and transferring the headquarters of their business thus creating real substance.


Any individual who spends a period or an aggregated period of more than 183 days in a tax year in the Republic of Cyprus is subject to both Income Tax and Special Defence Contribution (SDC).

Domestic or foreign-sourced income of a Cyprus resident, taking the form of dividends, interest or rent was subject to SDC.


According to the amendment of the Law and the non-domicile rules introduced,an individual who is a tax resident of Cyprus under the provisions of the Income Tax Law (183 days) BUT is “not-domiciled” in the Republic of Cyprus, will be exempt from SDC.

For the purposes of the Law, the term “domiciled in Cyprus” is defined as EITHER:

A.An individual who has a domicile of origin in the Republic of Cyprus, according to the provisions of the Wills and Succession Law, which is the domicile of his/her father at the time of his/her birth.


B.An individual who is considered a Cyprus tax resident, as per the Income Tax Law, for a period of at least 17 years out of the last 20 years before the relevant tax year, irrespective of his/her domicile of origin.

Nevertheless the above will not apply:

(i) Where an individual acquires and maintains a domicile of choice outside the Republic of Cyprus, as per the Wills and Succession Law, provided that this individual was not a Cyprus tax resident as per the Income Tax Law, for any period of at least 20 consecutive years before the relevant tax year.

According to the Wills and Succession Law, an individual acquires a domicile of choice by setting his habitation in any place outside the Republic of Cyprus, with the intention of making it his permanent or indefinite home but not otherwise.

Therefore, in order for a domicile of choice to be acquired, both must exist; the intention to acquire a domicile of choice (animus) and residence (factum).


Some general points are:

  • an individual cannot be without a domicile at any given time;
  • any individual can only have one domicile at each particular time; the existing domicile continues until a new one is acquired;
  • domicile is distinct from nationality, citizenship and residence status.


A Cyprus tax resident individual who spends more than 183 days in the Republic of Cyprus would be liable ONLY for Income Tax Law purposes and would be exempted from Special Defence Contribution (SDC) given that he/she is not considered domiciled in Cyprus*. Consequently, that individual would be exempt from SDC regarding income from Dividends, Interest and Rent irrespective of whether the sources are from Cyprus or abroad.

Given the exemptions under Income Tax Law, Dividends and Interest received both from Cyprus and worldwide sources would be totally exempt from Tax in Cyprus.

* An individual is not domiciled in the Republic of Cyprus if:

1.An individual doesn’t have domicile of origin in Cyprus; and

2.The individual was a Cyprus tax resident for less than 17 out of the last 20 years before the relevant tax year.



Christodoulos G. Vassiliades

Managing Director

Marianna Pavlides

Head of Immigration-Advocate

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