(UPDATED FOR THE 2026 TAX REFORM, EFFECTIVE 1 JANUARY 2026)
In an effort to encourage high net worth individuals to apply for Cyprus tax residency, the government simplified the Cyprus Tax System by eliminating taxation on passive income for non-domiciled residents.
The government also applied a deduction of up to 50% on Income Tax for non-dom high earners taking up employment in Cyprus.
Cyprus tax residence may be obtained by either spending 183 days in Cyprus or by spending only 60 days annually, provided the applicant follows the 60-day rule scheme.
Following the 2026 reform, the 60-day rule no longer requires the applicant to prove they are not tax resident in another jurisdiction, giving more flexibility to globally mobile individuals.
Individuals who are tax resident in Cyprus are taxed on worldwide income; however, a unilateral tax credit is available for taxes paid abroad.
WHO IS A NON-DOM
A person who is not a Cypriot at birth and was not a Cyprus tax resident for a period of at least 20 consecutive years prior to the tax year of application.
A person who is a Cypriot at birth and was not a Cyprus tax resident for a period of at least 20 consecutive years prior to the tax year of application.
(A) TAX EXEMPTION ON PASSIVE INCOME
The regime provides an exemption from Special Defence Contribution (SDC) that otherwise applies to passive income derived from dividends, interest, and rent for individuals who are Cyprus tax residents but not domiciled in Cyprus.