How To Get Non-Domicile Tax Residency Status in Cyprus (5 Steps)

Cyprus, known for its favorable tax regime and strategic location, has become a popular destination for individuals seeking to obtain non-domicile tax residency status.

This special tax status offers significant benefits, such as exemption from certain taxes on worldwide income, making it an attractive option for expatriates, high-net-worth individuals, and international investors.

In this article, we provide a comprehensive, step-by-step guide on how to get non-domicile tax residency status in Cyprus, the required documents, eligibility criteria, and the benefits of obtaining this status.

What is Non-Domicile Tax Residency in Cyprus?

The non-domicile (non-dom) tax residency status in Cyprus allows individuals who are not domiciled in Cyprus to benefit from a range of tax exemptions.

The non-dom status was introduced in 2015 to attract foreign nationals and investors to Cyprus, making it a favorable jurisdiction for tax planning.

A non-domicile individual in Cyprus is exempt from certain types of taxes, including:

• Special Defence Contribution (SDC): Exemption from tax on dividends, interest, and rental income.
  
  
• Capital Gains Tax: Exemption on gains from the disposal of securities.
  
  
• Inheritance Tax: Cyprus does not impose inheritance or estate taxes.

These benefits make Cyprus a highly attractive location for individuals looking to minimize their global tax liabilities.

Step-by-Step Guide to Getting Non-Domicile Tax Residency Status in Cyprus

To obtain non-domicile tax residency status in Cyprus, you need to meet specific criteria and follow a detailed application process. Here’s a step-by-step guide:

Step 1: Determine Your Eligibility

To qualify for non-domicile tax residency in Cyprus, you must meet the following criteria:

1. Not Domiciled in Cyprus: You should not have a Cypriot domicile of origin, meaning you were not born to a Cypriot father or have not resided in Cyprus for more than 17 out of the last 20 years before the tax year.
   
   
2. Become a Cyprus Tax Resident: To become a tax resident, you must either:
   
   
   • Spend at least 183 days in Cyprus within a calendar year.
     
     
   • Meet the 60-day rule, which requires:
     • Staying in Cyprus for at least 60 days in the tax year.
       
       
     • Not being a tax resident in any other country for the same tax year.
       
       
     • Having a business or employment in Cyprus.
       
       
     • Owning or renting a permanent residence in Cyprus.
       
       

Step 2: Gather the Required Documents

To apply for non-domicile status, you will need to prepare several documents to demonstrate your eligibility and meet the legal requirements. The required documents include:

1. Valid Passport or ID: A copy of your valid passport or national ID.
   
   
2. Proof of Residence: Documents showing you have a permanent residence in Cyprus, such as a rental agreement or property title deed.
   
   
3. Tax Residence Certificate: A certificate from your previous country of residence confirming that you have ceased to be a tax resident there.
   
   
4. Utility Bills: Recent utility bills (electricity, water, etc.) as proof of residence.
   
   
5. Employment or Business Documents: Evidence of employment, business activities, or income in Cyprus, such as an employment contract, company incorporation certificate, or business license.
   
   
6. Bank Statements: Statements showing your financial activities and transactions in Cyprus.
   
   
7. Affidavit or Declaration: A notarized affidavit declaring your intention to become a tax resident in Cyprus and confirming that you meet the 60-day rule criteria, if applicable.
   
   

Step 3: Register with the Tax Authorities

To obtain non-domicile tax residency status, you must register with the Cypriot Tax Department and obtain a Tax Identification Number (TIN). Here’s how to do it:

1. Visit the Local Tax Office: Go to the nearest District Tax Office in Cyprus with your documents.
   
   
2. Complete the Tax Registration Form (TD2001): Fill out the registration form, providing details about your personal information, employment, or business activities.
   
   
3. Submit Supporting Documents: Submit all the required documents along with the registration form. The tax office may request additional documentation to verify your eligibility.
   
   
4. Receive Your TIN: Once your application is processed, you will receive a Tax Identification Number, confirming your registration with the Cypriot Tax Department.
   
   

Step 4: Apply for Non-Domicile Status

After obtaining your TIN, you need to apply specifically for non-domicile status. Follow these steps:

1. Complete the Application Form: Fill out the “Application for Non-Domicile Tax Residency Status” form, available at the tax office or online.
   
   
2. Submit the Application and Documents: Provide the completed application form and all the necessary documents mentioned above to the District Tax Office.
   
   
3. Wait for Approval: The application review process may take several weeks. The Tax Department will assess your eligibility based on your documents and residency status.
   
   
4. Receive Confirmation: Once approved, you will receive official confirmation of your non-domicile status, along with details about the tax benefits you are entitled to.
   
   

Step 5: Comply with Annual Filing Requirements

To maintain your non-domicile status, you must comply with Cyprus’s annual tax filing requirements:

1. Submit Annual Tax Returns: File your annual income tax returns with the Cypriot Tax Department by the specified deadline, usually by July 31st of the following year.
   
   
2. Declare Your Worldwide Income: Even if you benefit from exemptions, you must declare all sources of income, including foreign income.
   
   
3. Renew Your Status: Non-domicile status is generally granted for an indefinite period as long as you meet the residency and domicile criteria. However, changes in circumstances or residency status may require renewal or reassessment.
   
   

Benefits of Non-Domicile Tax Residency Status in Cyprus

Obtaining non-domicile tax residency status in Cyprus offers several key benefits:

1. Exemption from Special Defence Contribution (SDC) Tax

Non-domicile residents are exempt from SDC tax, which includes:

• Dividends: No tax on dividend income, whether earned locally or abroad.
  
  
• Interest: No tax on interest income, including bank deposits and bonds.
  
  
• Rental Income: No SDC tax on rental income.
  
  

2. No Inheritance or Estate Taxes

Cyprus does not impose any inheritance or estate taxes, allowing non-domicile residents to transfer their wealth to their heirs without incurring additional tax liabilities.

3. Capital Gains Tax Exemption

Non-domicile residents are exempt from capital gains tax on profits from the sale of securities, such as shares, bonds, and other financial instruments.

This exemption can result in significant tax savings for individuals engaged in investments and trading.

4. Favorable Personal Income Tax Rates

Cyprus offers competitive personal income tax rates, with the first €19,500 of annual income being tax-free. Beyond that, income is taxed at progressive rates ranging from 20% to 35%.

Non-domicile residents can benefit from these low tax rates while enjoying exemptions on certain types of income.

5. Double Tax Treaties

Cyprus has a vast network of double tax treaties with over 60 countries, allowing non-domicile residents to avoid double taxation on their foreign income.

FAQs About Non-Domicile Tax Residency in Cyprus