Cyprus non-dom tax regime 2026: what changed in January and what it means for you

Cyprus has operated a non-domicile (non-dom) tax regime since 2015. Parliament enacted material reforms in December 2025, effective 1 January 2026, tightening the qualifying criteria while preserving the core exemptions that have made the regime attractive to international professionals. If you relocated to Cyprus before 2026 or are planning to, this is what you need to understand.

Legislative basis: The non-dom exemptions are contained in the Special Defence Contribution Law (Law 117(I)/2002) and the Income Tax Law (Law 118(I)/2002). The December 2025 amendment was enacted as Law 195(I)/2025, published in the Official Gazette of the Republic on 22 December 2025.

The core exemption: what non-dom status gives you

Cyprus income tax applies to worldwide income of tax residents at progressive rates up to 35%. But Cyprus also levies a Special Defence Contribution (SDC) on certain types of passive income:

• Dividends: 17% SDC
• Interest: 30% SDC (reduced to 3% for bank deposit interest from 2020)
• Rental income: 3% SDC (on 75% of gross rents)

Non-dom individuals are completely exempt from SDC on all three categories. For a Cyprus resident receiving significant dividend income from a foreign company — a common profile among relocated entrepreneurs and executives — this exemption is the primary financial driver of the regime.

Who qualifies as non-dom in 2026

Under the amended Law 195(I)/2025, both the old criteria and new criteria must be understood:

Old rule (pre-2026): Non-dom status applied to any Cyprus tax resident who was not domiciled in Cyprus under the Wills and Succession Law (Cap. 195). This effectively meant: if your domicile of origin (the domicile you inherited at birth from your father under Cypriot private international law) was outside Cyprus, you were non-dom. The practical effect was that the vast majority of non-Cypriots relocating to the island automatically qualified.

New rule (effective 1 January 2026): The amendment introduces a 17-year cap with a deemed domicile provision. Specifically:

1. An individual becomes deemed domicile in Cyprus (and therefore loses non-dom status) once they have been a Cyprus tax resident for 17 consecutive or non-consecutive years within a 20-year look-back period.
2. Additionally — and this is the key new tightening — individuals who were Cyprus-domiciled at birth (i.e. Cypriots who emigrated and have now returned) can no longer claim non-dom status after a qualifying period, regardless of time abroad.

The 17-year window was already present in the regime as a sunset provision. The 2026 amendment clarifies the calculation methodology and closes certain planning gaps that had been used by returning Cypriot nationals.

For most international professionals relocating to Cyprus in 2026 or later, the practical effect is unchanged: you are non-dom from day one of qualifying as a Cyprus tax resident, and you remain so for up to 17 years.

Qualifying as a Cyprus tax resident

Non-dom status requires Cyprus tax residency as a prerequisite. There are two routes:

183-day rule: Spend more than 183 days in Cyprus in the tax year (1 January – 31 December). Days of departure and arrival both count.

60-day rule (since 2017): Qualify as a Cyprus tax resident if in the tax year you:

• Spend at least 60 days in Cyprus
• Are not a tax resident of any other country
• Are not tax resident in Cyprus for more than 183 days in any other country
• Maintain certain Cyprus ties: employment or business activity in Cyprus, or a permanent home in Cyprus (owned or rented)

The 60-day rule is the relevant route for high-mobility individuals — entrepreneurs and executives who split time between multiple countries and cannot reliably hit 183 days in Cyprus.

What the exemption is actually worth

The value depends entirely on the composition of your income. Three worked examples:

Example 1: Entrepreneur who receives dividends from a non-Cyprus holding company Dividend income: €300,000/year

• Without non-dom: 17% SDC = €51,000 per year in SDC alone (plus income tax if classified as employment income)
• With non-dom: €0 SDC on dividends
• Annual saving: €51,000

Example 2: Executive with a salary package including employer stock awards Employment income: €120,000/year gross; dividend income from RSUs vested outside Cyprus: €40,000/year

• SDC on dividends without non-dom: €6,800/year
• With non-dom + 50% income tax exemption (if qualifying new resident earning above €55,000): effective income tax rate on €120,000 gross ≈ 9–11%
• Combined annual tax advantage vs equivalent UK or German tax residency: often €25,000–€45,000 per year

Example 3: Retiree with investment portfolio generating interest and dividends Interest income: €80,000/year; dividend income: €60,000/year

• SDC without non-dom: up to €24,000 SDC on interest at 30% (reduced rate applies to bank deposits) + €10,200 SDC on dividends
• With non-dom: €0 on both
• Annual saving: variable but typically €15,000–€34,000 depending on instrument type

The 50% income tax exemption: a different, stackable benefit

The non-dom SDC exemption is often confused with the 50% income tax exemption under Section 8(21) of Income Tax Law (Law 118(I)/2002). These are separate provisions that can be applied simultaneously.

The 50% exemption applies to employment income only, for individuals who:

• Were not Cyprus tax residents for 10 consecutive years immediately before commencing employment in Cyprus
• Earn above €55,000 gross per year from their Cyprus employment

The exemption runs for up to 17 years from the start of employment. There is also a lower-threshold variant (20% exemption or €8,550 cap, whichever is lower) for salaries below €55,000, but this is far less valuable in practice.

Stacking both: a new Cyprus resident on a €150,000 employment salary who also receives €100,000 in dividends from a foreign company would:

1. Pay income tax on only €75,000 (50% of €150,000) at standard Cyprus rates — effective employment income tax of roughly 16–18%
2. Pay zero SDC on the €100,000 of dividends

The combined effective tax rate on €250,000 of total income is typically under 10%, versus 45%+ in the UK or 42–45% in Germany.

Practical steps to claim non-dom status

1. Register as a Cyprus tax resident with the Tax Department of Cyprus (Τμήμα Φορολογίας) — form T.D.1162 for individuals. You will be issued a Tax Identification Code (TIC).
2. File a declaration of non-dom status — this is done as part of the annual income tax return (IR1 form), confirming that your domicile of origin is outside Cyprus and that you have not been a Cyprus tax resident for 17 or more qualifying years.
3. Maintain residency documentation — keep records of days in Cyprus (passport stamps, flight records, accommodation receipts) to substantiate the 183-day or 60-day qualification each year.
4. Take Cyprus-qualified tax advice before completing your first-year return. The interaction between the non-dom rules, the 50% exemption, the double taxation treaty applicable to your home country, and GeSY contribution calculations is genuinely complex.

Key professionals to engage

The Cyprus Bar Association maintains a register of qualified Cyprus lawyers who advise on tax residency and immigration. For tax compliance, only Cyprus-registered tax advisers (registered with the Institute of Certified Public Accountants of Cyprus — ICPAC) can sign off tax returns.

For salary context, use the Cyprus gross-to-net salary calculator. For the relocation practicalities, see the Cyprus UK relocation guide.