Expat Finance Guide

Understanding Cyprus Tax: Residency, Non-Dom Status & Double Taxation Treaties (2025)

The Cypriot tax system is one of the biggest attractions for expats, particularly entrepreneurs, investors, and high-net-worth individuals. Understanding concepts like "tax residency" and "non-domicile status" is crucial to unlocking significant financial benefits. This CyExpats.com guide simplifies these key topics to show you how the system works.

The Core Advantage: Cyprus taxes its residents on their worldwide income. However, for tax residents who are "non-domiciled," there is a full exemption from tax on worldwide dividend and interest income for 17 years. This is the cornerstone of Cyprus's appeal to international professionals.

How to Become a Cyprus Tax Resident

Your tax obligations are determined by your residency status. An individual is considered a tax resident of Cyprus if they meet **either** the "183-day rule" or the more flexible "60-day rule".

The "183-Day Rule" (The Standard Rule)	The "60-Day Rule" (The Flexible Rule)
You are a Cyprus tax resident if you are physically present in Cyprus for more than 183 days in a single tax year (Jan 1 - Dec 31).	You can become a tax resident by spending just 60 days in Cyprus, provided you meet all of the following conditions within the same tax year: You do not reside in any other single country for more than 183 days. You are not a tax resident of any other country. You carry out business, are employed, or hold an office (e.g., director) in a Cyprus tax-resident company. You maintain a permanent home in Cyprus (either owned or rented).

The "183-Day Rule" (The Standard Rule)

The "60-Day Rule" (The Flexible Rule)

You are a Cyprus tax resident if you are physically present in Cyprus for more than **183 days** in a single tax year (Jan 1 - Dec 31).

You can become a tax resident by spending just **60 days** in Cyprus, provided you meet **all** of the following conditions within the same tax year:

You do not reside in any other single country for more than 183 days.
You are not a tax resident of any other country.
You carry out business, are employed, or hold an office (e.g., director) in a Cyprus tax-resident company.
You maintain a permanent home in Cyprus (either owned or rented).

The "Non-Dom" Advantage: A Game Changer for Expats

This is where Cyprus truly stands out. In most countries, tax residents pay tax on all their income. In Cyprus, a distinction is made between being "resident" and being "domiciled".

Domiciled residents are typically Cypriots who are subject to Special Defence Contribution (SDC) tax on their worldwide dividend (17%), interest (30%), and rental income (3% on 75% of gross rent).
Non-domiciled residents are expats who qualify for the "non-dom" status. You are considered non-domiciled if you have not been a tax resident of Cyprus for at least 17 out of the last 20 years.

Benefits of Non-Domicile Status

For up to 17 years, a Cyprus tax resident with non-dom status enjoys:

Tax on Worldwide Dividend Income

Tax on Worldwide Interest Income

This means you can receive dividends from your companies or interest from your bank accounts globally without paying any Special Defence Contribution tax in Cyprus.

💸 Calculate Your Non-Dom Dividend Income

See exactly what the 0% tax on dividends means for your passive income from local or international stocks and ETFs.

Other Major Tax Benefits for Residents

No Inheritance or Gift Tax: Cyprus does not impose these taxes, making it excellent for wealth and succession planning.
No Tax on Capital Gains from Securities: Profit from the sale of shares, bonds, and other similar financial instruments is completely tax-exempt. (Note: This does not apply to the sale of property located in Cyprus).
Favourable Pension Taxation: Foreign pension income is taxed at a flat rate of just 5% on amounts exceeding €3,420 per year.

pensioners, including those with UK pensions, can see how this favourable rate applies to them with our specialized calculator.
➜ Try the Expat Pension & Tax Calculator
Low Income Tax Rates: The first €19,500 of annual income is tax-free. Thereafter, progressive rates apply from 20% to 35%.

Whether you're an employee, freelancer, or business owner, see what your net income will be:
➜ Try the Income Tax & GESY Calculator
➜ Try the Self-Employment Income Calculator

Double Taxation Treaties (DTTs)

To prevent individuals and companies from being taxed on the same income in two different countries, Cyprus has signed over 65 Double Taxation Treaties. These agreements define which country has the primary right to tax specific types of income.

Example: The UK-Cyprus Treaty

This treaty is highly relevant for British expats. It ensures that if you are a tax resident in Cyprus:

UK Government & most private pensions are taxable only in Cyprus (at the favourable 5% rate), not in the UK. You can model this exact scenario with the Expat Pension & Tax Calculator.
Rental income from a UK property remains taxable in the UK, but you can claim credit for the UK tax paid against any (unlikely) Cypriot tax due on that same income, preventing double payment.
Dividends paid from a UK company to a Cyprus resident can be taxed in Cyprus. However, due to the non-dom rules, a Cyprus non-dom resident will pay 0% tax on this income. See the benefit with the Dividend Calculator.

Official Resources: