Cyprus tax residency and non-domiciled rules

A Cyprus tax resident is an individual who either spends at least 183 days in the country each calendar year or meets the “60-day” rule. The “60-day rule” applies to individuals who have genuine economic ties to Cyprus but do not spend 183 days there.

The governing law is the Income Tax Law (Law 118(I)/2002), as amended, including the 14 July 2017 amendment that introduced the “60-day rule”, and the 2025 reform package (in force from 1 January 2026), which amended the “60-day rule” and introduced the broader changes summarised below.

What changed in 2026

Cyprus enacted a tax reform, approved by Parliament on 22 December 2025 and published in the Government Gazette on 31 December 2025. The reform took effect on 1 January 2026.

Changes relevant to tax residency include:

• the 60-day residency rule was simplified ("not tax resident elsewhere" requirement removed);
• SDC on actual dividend distributions for domiciled residents was reduced from 17% to 5% (post-2026 profits);
• SDC on rental income was abolished;
• deemed dividend distribution was abolished for profits from 2026 onwards;
• a lump-sum extension of non-dom status was introduced;
• the personal income tax-free threshold rose from €19,500 to €22,000.

How to become a Cyprus tax resident under the 60-day rule?

To become a Cyprus tax resident under the “60-day rule” in 2026, the individual must meet all of the following conditions:

• Remain in Cyprus for at least 60 days during the tax year in question; and
• Not reside in any other single state for a period exceeding 183 days; and
• Carry out business activities in Cyprus and/or work in Cyprus and/or be a director in a company that is tax resident in Cyprus at any time of the tax year in question (usually, salary payment OR director remuneration is needed); and
• Maintain a permanent residence in Cyprus (owned or rented home).

Before the 2026 reform, a fifth condition applied: the individual could not be tax resident in any other country during the same tax year. That condition was removed, effective from 1 January 2026.

Where a dual residency situation arises, it is now resolved under the tie-breaker rules of the applicable double tax treaty.

What are the applicable tax benefits?

Benefits for tax residents of Cyprus include, among others:

• No income tax on dividends
• No income tax on interest
• No wealth tax
• No inheritance tax
• No gift tax

Individuals who are Cyprus tax residents, whether under the “60-day rule” or the “183-day rule”, are taxed in Cyprus on their worldwide income, but certain exceptions apply, as follows:

• A Cyprus tax-resident individual who is not domiciled in Cyprus is exempt from taxation on his/her worldwide dividend and ‘passive’ interest income. Dividends will be subject only to a 2,65% GeSY tax, capped at the first €180,000 of dividends per year. An individual who does not have a “Domicile of Origin” in Cyprus is only considered to be domiciled in Cyprus for tax purposes when the individual has been a tax resident of Cyprus for a period of at least 17 years out of the last 20 years before the tax year in question.
• Profit from the sale of securities is exempt from tax in Cyprus. ‘Securities’ include, among other things, shares in local or foreign companies, bonds, debentures, options, etc, except in cases where the value of the shares derives from the value of immovable property in Cyprus.
• An individual who is employed in Cyprus and whose annual remuneration exceeds €55,000 will enjoy a 50% exemption on their income tax in Cyprus for a period of 17 years, provided they were not a tax resident of Cyprus for at least 15 consecutive years prior to commencing their employment.
• Income from employment carried out outside Cyprus is exempt from Cyprus income tax, provided that the employment exceeds 90 days per tax year.

Who is domiciled in Cyprus?

A person is domiciled in Cyprus by domicile of origin and choice.

Domicile of origin is the domicile a person acquires at birth.

Domicile of choice means acquiring a residence in the Republic by choice (a person’s actions and initiative). The residence has to be permanent and indefinite. The relevant law is the Wills and Succession Law, sections 6-11.

While the Wills and Succession Law provides the general legal definition of domicile, for the specific purpose of determining liability for the Special Contribution for the Defence (SDC), an individual is automatically deemed to be domiciled in Cyprus if they have been a tax resident for at least 17 of the last 20 years before the tax year in question.

The relevant legislation is the Special Contribution for the Defence of the Republic Law (Law 117 (I)/ 2002, as amended).

What is a non-dom in Cyprus?

A Cyprus non-dom is a Cyprus tax resident who is not considered domiciled in Cyprus for tax purposes. The status is defined by two tests working together:

• residency test,
• domicile test.

Who qualifies

To qualify for non-dom status, an individual must first be a Cyprus tax resident (under the 183-day rule or the 60-day rule) and must not be domiciled in Cyprus. A person is not domiciled in Cyprus if both of the following apply:

• They do not have a domicile of origin in Cyprus (domicile of origin is acquired at birth, generally following the father's domicile), and they have not acquired a domicile of choice in Cyprus by moving there with the intention of remaining permanently; and
• They have not been a Cyprus tax resident for at least 17 of the 20 years immediately preceding the tax year in question. This is the "deemed domicile" rule introduced by the Special Contribution for the Defence Law.

What is exempt

Non-dom status exempts the individual from SDC on:

• Worldwide dividend income.
• Worldwide passive interest income.
• Rental income (SDC on rents was abolished for all residents from 1 January 2026; rental income remains subject to ordinary income tax and to GeSY contributions).

Non-dom status does not exempt the individual from ordinary income tax on employment or business income, capital gains tax on the disposal of Cyprus-situated immovable property, or GeSY contributions.

How long does the non-dom status last

Non-dom status lasts 17 tax years from the date the individual first becomes a Cyprus tax resident. Under the 2026 tax reform, an individual whose domicile of origin is outside Cyprus may choose to extend the regime for two consecutive five-year periods by paying a lump sum of €250,000 per period. This gives a potential maximum of 27 years of non-dom SDC exemption.

How to apply

Non-dom status is declared to the Cyprus Tax Department and, in practice, recorded at the point of registering for a Cyprus tax identification number (TIN).

The Tax Department can issue a written confirmation of non-dom status on request. This confirmation is commonly required by Cyprus banks and by foreign tax authorities.

Benefits of non-domiciled tax residents of Cyprus

In brief, non-domiciled tax residents of Cyprus are entitled to:

• The tax benefits available to all tax residents of the Republic, and
• Exemption from paying the SDC.

Here is the table with all non-dom status tax benefits:

Special Contribution for the Defence (SDC)	Exempted
Interest	Exempted
Dividends	Exempted
Income	Taxed on a scale, the first €22,000 are not taxed
Capital Gains	Taxed at 20% with allowances
Pension	Foreign pensions: the recipient may choose to be taxed annually either at normal progressive rates or at a flat 5% on the portion exceeding €5,000. Relief from double taxation is available under the network of double tax treaties.

The SDC

The SDC aims to boost the Republic's defence capability. The relevant legislation is the Special Contribution for the Defence of the Republic Law (Law 117 (I)/ 2002, as amended).

Non-domiciled tax residents of the Republic are exempt from the SDC. To pay the SDC, individuals must be domiciled tax residents of the Republic.

Domiciled tax residents pay the SDC as follows:

• The applicable rate on dividends is determined by the year in which the distributed corporate profits were generated.
  • 5% for dividends distributed from company profits generated from 1 January 2026 onwards.
  • 17% for dividends distributed from company profits generated up to 31 December 2025 (this transitional rate applies to distributions made until 31 December 2031).
• 17% on standard interest.
• 3% on interest from government and corporate bonds.

Interest on compensation for disability or grievous bodily harm is exempted.

A person whose total annual income, including interest, does not exceed €12,000 may claim a refund on the SDC on interest. Contributions over 3% will be returned.

Deemed dividend distribution (DDD)

DDD was abolished for company profits earned on or after 1 January 2026, and Cypriot companies are no longer required to deem their undistributed profits as distributed for SDC purposes. Profits earned up to 31 December 2025 remain subject to the previous DDD rules under transitional arrangements.

This change primarily affects Cyprus-domiciled shareholders, since non-dom shareholders were already exempt from SDC on deemed dividends.

Read more about the Cyprus tax system.

Crypto assets and employee stock options

The 2026 tax reform introduced two specific flat-rate regimes.

Crypto-asset disposals

Profits from the disposal of crypto-assets by both individuals and companies (including sales, exchanges, donations, or use as payment) are taxed at a flat rate of 8%. Losses from crypto disposals may be offset only against crypto gains in the same tax year and cannot be carried forward.

Crypto mining is excluded from this regime and is subject to ordinary income tax.

Approved employee stock option schemes

Benefits from approved employee stock option schemes, when granted as employment income, are taxed at a flat rate of 8%, subject to statutory conditions and limits. Schemes that do not qualify remain subject to ordinary income tax as employment income.

Capital gains tax in Cyprus

Cyprus capital gains tax (CGT) applies only to gains from the disposal of immovable property situated in Cyprus, and to gains from the disposal of shares in unlisted companies that derive value from immovable property in Cyprus. Gains from other classes of assets, including most securities, are not subject to CGT.

The CGT rate is 20%.

Residents and non-residents alike are subject to CGT when disposing of Cyprus-situated immovable property or qualifying shares. Residency is not relevant; only the location of the underlying property is.

Shares test, post-2026

The 2026 reform expanded CGT to disposals of shares in companies where at least 20% of the company's value derives (directly or indirectly) from Cypriot real estate. The previous threshold was 50%.

Lifetime exemptions, post-2026

Three lifetime exemptions reduce the taxable gain on qualifying disposals. These thresholds were increased by the 2026 reform and apply to disposals completed on or after 1 January 2026:

• General exemption for disposals of immovable property: €30,000 (previously €17,086).
• Disposal of agricultural land by a professional farmer: €50,000 (previously €25,629).
• Disposal of a primary residence, subject to continuous occupation conditions: €150,000 (previously €85,430).

The exemptions are lifetime allowances, not annual ones. They are deducted from the taxable gain, not from the sale price, and cumulative use across multiple disposals draws down the available balance.

Non-domiciled tax residents’ obligations

Non-domiciled tax residents of Cyprus still have to pay tax on:

• Income (with the abovementioned exceptions).
• Capital gains (gains from selling property like land, buildings and shares) with some general allowances under the Capital Gains Tax Law of 1980.
• The relevant municipality taxes for the area in which they live.
• Tax for the General Health System.

How does Cyprus tax residency work for expats?

For expats relocating to Cyprus, taxation comprises four components:

Residency

Expats typically qualify under either the 183-day rule (physical presence of more than 183 days in Cyprus in a calendar year) or the 60-day rule (at least 60 days in Cyprus, no more than 183 days in any other single country, employment or business or directorship in Cyprus, and a permanent home in Cyprus).

Following the 2026 reform, the 60-day rule no longer requires proof of non-residency elsewhere. Dual-residency cases are resolved under double tax treaty tie-breakers.

Non-dom status

Most expats arriving from outside Cyprus qualify as non-domiciled and benefit from SDC exemption on dividends, interest, and (from 2026) rental income for 17 years, with an optional extension.

50% employment exemption

Expats taking up their first employment in Cyprus with annual remuneration exceeding €55,000 may qualify for an income tax exemption of 50% for up to 17 years, provided they were not Cyprus tax residents for at least 15 consecutive years before starting employment.

Foreign pension option

Expats receiving a pension from other countries for services rendered abroad may choose annually to be taxed either at normal progressive rates or at a flat 5% on the portion of the pension exceeding €5,000 per year.

The interaction between these components depends on the individual's source of income, country of origin, and any applicable double tax treaty. We recommend a case-specific review before making residency decisions.