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In 2015, a special status began to operate in Cyprus for investors permanently residing in this country, the so-called “Non-Dom” (“not domiciled”). Obtaining this status allows a resident of the jurisdiction not to pay defense tax (DTT), as well as receive some other tax benefits.

Who can get Non-Dom status?

All tax residents of Cyprus are divided into two categories: “domicile” (domocile) and non-domicile (non-domicile or non-domicile).

Domiciles are “indigenous” residents who have lived in Cyprus for more than 17 of the last 20 years. This status is given to those who:

  • were born in Cyprus and received the status of permanent residence by birthright;
  • chose Cyprus as their place of residence and bought residential property in the country.

Who then is not “Non-Dom”?

is an individual who has chosen Cyprus as their place of residence (item b of the previous list), but has not been a tax resident of Cyprus for at least the last 20 years preceding the current tax year.
an individual who has not been a tax resident in Cyprus for 20 consecutive years prior to the introduction of the law on status without permanent residence (until July 16, 2015). But provided that this person has not been a tax resident of Cyprus for 17 of the last 20 years prior to the tax year in question.

Tax benefits that the status of “Non-Dom” gives

The main advantage of the status is that it allows you not to pay the defense tax, which consists of:

  • Tax on dividends at the rate of 17%;
  • Tax on interest on bank deposits at a rate of 30%;
  • Tax on rental income at a rate of 3%.

Non-Domilians are exempt from paying the listed taxes, regardless of the country in which the income was received. In addition, they do not pay taxes on:

  • inherited property and property received from family members under a gift agreement;
  • sale of shares and other securities;
  • sale of real estate outside of Cyprus.

How to determine who is a tax resident in Cyprus?

The status without permanent residence can only be obtained by residents of Cyprus. And residents of Cyprus are those who fulfill one of the following rules:

  • “Rule of 183 days”

an individual is considered a tax resident in Cyprus if he spends at least 183 days in Cyprus in the tax year in question.

  • “The 60 Day Rule”

This rule has been in force since July 2017, according to which an individual is considered a tax resident of Cyprus if, in the tax year in question:

  • the individual is present in Cyprus for at least 60 days, conducts business there or works in a local company, or holds a managerial position in a company that is tax resident in Cyprus (but provided that this activity has not ceased during the reporting tax year);
  • such person must have a place of residence in Cyprus (on lease or in personal possession);
  • an individual has not been in the territory of another state for more than 183 days;
  • is not a tax resident of another jurisdiction.

Please note that this article is for informational purposes only. For further advice, please contact us at the contacts listed on the site.

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