The primary objective of the non-domicile regulations is to encourage affluent individuals to relocate to Cyprus, utilizing it as a hub for their businesses and establishing substantial business operations there. 

Regarding Taxation and the Definition of Cyprus Tax Residents: 

Cyprus Tax Residents are obligated to pay both Income Tax and Special Defence Contribution (SDC) on their global income. 

A Cyprus Tax resident falls into one of the following categories: 

a. An individual who spends over 183 days in Cyprus during a tax year. 


b. An individual who spends 60 days in Cyprus during a tax year and fulfills the following criterias: 

  • They are not considered a tax resident or resident in any other country in that tax year by spending more than 183 days in that foreign country. 
  • They are engaged in business activities in Cyprus and/or are employed in Cyprus and/or hold an office in a Cyprus tax resident company during the tax year. 
  • They maintain a permanent home in Cyprus, either owned or rented. 

If their employment or business involvement as described in the second condition ceases during the fiscal year, the individual will no longer be considered a Cyprus tax resident for that tax year under these extended rules. 

Regarding the Amendment of the Special Defence Contribution: 

Under the domicile rules, an individual who qualifies as a tax resident in Cyprus as per the Income Tax Law but is not considered “domiciled” in Cyprus will be exempt from SDC. 

For the purposes of the Law, “domiciled in Cyprus” is defined as either: 

a. An individual with an original domicile in Cyprus according to the Wills and Succession Law, which corresponds to the domicile of their father at the time of their birth. 


b. An individual who is recognized as a Cyprus tax resident, per the Income Tax Law, for a minimum of 17 years out of the last 20 years before the relevant tax year, regardless of their domicile of origin. 

The above definition does not apply: 

a. When an individual gains and maintains a domicile of choice outside Cyprus in accordance with the Wills and Succession Law, provided that the individual was not a Cyprus tax resident as per the Income Tax Law for any period of at least 20 consecutive years before the relevant tax year. 

Under the Wills and Succession Law, an individual establishes a domicile of choice by choosing to reside in a location outside Cyprus with the intent of making it their permanent or indefinite residence. 

Therefore, to establish a domicile of choice, both the intention (animus) and residence (factum) must be present. 


b. When an individual has not been a Cyprus tax resident as per the Income Tax Law for a continuous period of at least 20 years immediately before the amendment of the Law, which came into effect on July 16, 2015. 

Even if an individual possesses a Cypriot domicile of origin, they may not be considered domiciled in Cyprus under this provision of the Law. 

Key points: 

  • An individual cannot be without a domicile at any given time. 
  • Each individual is limited to having only one domicile at any particular time. 
  • The existing domicile continues until a new one is established. 
  • Domicile is separate from nationality, citizenship, and residential status. 

Advantages of the Tax Scheme: 

A Cyprus tax resident who lacks domicile in Cyprus is solely liable for Income Tax and is exempt from SDC. Consequently, such an individual would not be subject to SDC on income from Dividends, Interest (not linked to regular business operations), and Rent, regardless of whether these income sources are within Cyprus or from overseas. 

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