Cyprus tax residency and non-domiciled rules

This guide summarises how an individual becomes a Cyprus tax resident (183-day / 60-day rules), how “domicile” is determined for Special Defence Contribution (SDC), and the resulting tax effects. All legal references below link to the official CyLaw texts.

Tax residency in Cyprus

An individual is a tax resident of Cyprus if they meet one of the following tests:

• 183-day rule: Present in Cyprus for at least 183 days in the tax year; or
• 60-day rule: All of the below are met:
  • Remain in Cyprus for at least 60 days in the tax year;
  • Do not reside in any other single state for more than 183 days in aggregate;
  • Are not a tax resident of any other state;
  • Carry out business and/or work in Cyprus and/or hold a directorship in a Cyprus tax resident company at any time during the tax year;
  • Maintain a permanent residence in Cyprus (owned or rented).

Source: Income Tax Law 118(I)/2002, Article 2 (CyLaw).

Domicile and the 17/20 deeming rule

Domicile is distinct from tax residency and citizenship. The general concept (domicile of origin / domicile of choice) is defined in the Wills and Succession Law (Cap. 195).

For SDC purposes, the law adds a deeming provision:
“Νοείται ότι, ανεξαρτήτως της κατοικίας καταγωγής, οποιοδήποτε άτομο είναι κάτοικος στη Δημοκρατία, όπως ορίζεται από τις διατάξεις του περί Φορολογίας του Εισοδήματος Νόμου, για τουλάχιστον δεκαεπτά (17) από τα τελευταία είκοσι (20) έτη πριν από το φορολογικό έτος, λογίζεται ως κάτοικος (domicile) στη Δημοκρατία.”

Source: Special Contribution for the Defence of the Republic Law 117(I)/2002, Article 2(3) (CyLaw).

Special Defence Contribution (SDC)

SDC applies only to Cyprus tax resident individuals who are domiciled in Cyprus. The main rates are:

• Dividends: 17% (Article 3(2)(a))
• Passive interest: 17% (Article 3(2)(b)); interest from ordinary business activities is excluded
• Rents: 3% on 75% of gross rent (effective 2.25%) (Article 3(2)(d))
• Certain bonds: 3% on interest from specified government/corporate bonds (Article 3(2)(c))

All references above are to Law 117(I)/2002 (CyLaw).

Capital Gains

Capital Gains Tax (CGT) applies only to disposals of immovable property in Cyprus and to shares in companies deriving >50% of their value from such Cyprus immovable property. Gains from disposal of “titles” (e.g., shares, bonds, fund units) are otherwise exempt.

Source: Capital Gains Tax Law, Cap. 52 (CyLaw).

What we offer

• Domicile / 17-out-of-20 review: written opinion on dom vs non-dom status and risk points.
• Company registration: Cyprus company formation and directorship onboarding.

Example

A Cyprus company distributes a €100,000 dividend from profits: a domiciled tax resident pays 17% SDC (€17,000) plus GHS contributions (if applicable). A non-dom tax resident pays 0% SDC (GHS may still apply).