Concept
Cyprus is an EU member state that assembled its regime for mobile high-net-worth individuals long ago. It rests on two pillars: non-dom status and the 60-day rule. A non-dom (a resident without Cypriot domicile) pays 0% on dividends and interest; the 60-day rule lets you become a tax resident without living on the island for half the year. After the United Kingdom wound down its own non-dom in 2025, Cyprus remained one of the few EU jurisdictions with a long window of zero tax on passive income.
Where the Regime Came From
Cyprus built its tax showcase step by step. After the 2013 banking crisis the island set about attracting capital and residents: in 2015 it introduced non-dom status with zero SDC on dividends and interest, in 2017 the 60-day rule for frequent travellers, and in 2022 incentives for new high-earning employees. The 2026 reform reshuffled rates and thresholds but kept both pillars and added a paid mechanism to extend non-dom beyond 17 years.
Tax Residency: 183 Days or 60 Days
Cyprus offers two tax residency tests:
- 183 days — the standard rule (more than 183 days in a calendar year);
- the 60-day rule — you can become a resident by spending at least 60 days in Cyprus if: you have accommodation (owned or rented), you have a business, employment or position in Cyprus, and you do not spend more than 183 days in any other single country. The former condition of "not being a tax resident of another country" was removed from the law by the 2026 reform.
The 60-day rule is precisely what makes Cyprus attractive for mobile individuals: you don't need to live 183+ days, but you need real ties (accommodation + business); a conflict with another country's residency is settled through the treaty (DTT) tie-breaker.
What Non-Dom Status Provides
A resident not domiciled in Cyprus is exempt from the Special Defence Contribution (SDC). For a domiciled resident, SDC is 5% on dividends (17% before the 2026 reform) and 17% on interest; a non-dom pays under neither line. That is where "0% on passive income" comes from.
- 0% on dividends and interest — regardless of source — for 17 years (the non-dom rule: 17 of the last 20 years); from 2026 — extension in blocks up to 27 years for €250,000/block;
- capital gains: tax only on Cypriot real estate; foreign capital gains — 0%;
- salary and other income — ordinary progressive income tax (up to 35%, with a tax-free allowance); for new residents with high employment income there is a 50% exemption;
- GeSY contribution (for healthcare) 2.65% on dividends/interest/rent, with an income ceiling of €180,000 (max. ≈€4,770/year) — this is the effective "price" for non-doms on dividends up to the ceiling.
The 2026 reform — Law 207(I)/2025, passed on 22 December 2025 and in force from 1 January (KPMG) — changed the parameters but left the non-dom core in place. The income-tax tax-free allowance was raised from €19,500 to €22,000, and the top 35% rate now starts at €72,000 instead of €60,000. For domiciled residents, SDC on dividends was cut from 17% to 5% (on profits earned from 2026), deemed dividend distribution was abolished for 2026-onwards profits, and corporate loss carry-forward was stretched from 5 to 7 years. Corporate tax rose from 12.5% to 15% — the level of the Cyprus holding company, which does not affect personal non-dom. The "year-18 cliff" also softened: once non-dom runs out, a domiciled resident's dividends are taxed at 5%, not the former 17%.
Domicile and the 17-Year Rule
Non-dom rests on the distinction between domicile and residence. Domicile of origin is inherited at birth and hard to change: it takes a domicile of choice — relocating with the intention of staying permanently. As long as the domicile of origin remains outside Cyprus, you are a resident without Cypriot domicile, and SDC on dividends and interest is zero. But the law treats as domiciled anyone who has been a Cypriot tax resident for 17 of the last 20 years — hence the seventeen-year boundary. More detail is in Domicile, residence and citizenship in succession.
Before 2026, everything ended at seventeen years. From 1 January 2026 a paid mechanism appeared: someone whose domicile of origin is outside Cyprus can extend the zero SDC by two five-year blocks — up to 27 years in total — by paying €250,000 for each block. The payment is non-refundable and made in full; the application is generally filed by 30 June of the first year of the block (for those who became domiciled in 2024-2025 a transitional deadline of 30 June 2026 applies).
Immigration: Residence Permits and Permanent Residency
- Permanent residency through investment: purchase of real estate from €300,000 (plus VAT) — fast-track permanent residence permit with confirmed foreign income;
- employment and business routes, company registration;
- Cyprus is an EU member but not part of Schengen.
Scenarios
Holding company and dividends. For someone who lives on dividends or interest, non-dom gives 0% SDC (plus GeSY up to the ceiling). It is often paired with a Cyprus holding company or a wider holding structure: the company distributes dividends to the non-dom individual without SDC, while at the company level EU directives and the treaty network apply.
Mobile entrepreneur. The 60-day rule suits those who don't want to be tied to 183 days but are ready to create real ties.
Family with multiple residencies. Cyprus as a tax home for passive income while maintaining business in other jurisdictions.
Risks
- non-dom does not equal zero on everything: salary is taxed, there is GeSY and tax on Cypriot real estate;
- since 2026 the 60-day rule no longer requires the absence of tax residency in another country, but if two residencies conflict the outcome is decided by the treaty tie-breaker — the analysis is essential;
- controlled foreign companies (CFC) and the exit rules of the country you are leaving;
- substance: "accommodation + business" for the 60 days must be real — formal ties do not pass the substance test.
Frequently Asked Questions
What is the tax on dividends for non-doms?
0% SDC. In practice, only the GeSY contribution of 2.65% remains, with an income ceiling of €180,000 (max. ≈€4,770 per year).
How many years does non-dom status last?
17 years; from 2026 it can be extended by two 5-year blocks (up to 27 years) for €250,000 per block.
What is the 60-day rule?
You can become a tax resident by spending 60 days in Cyprus if you have accommodation and business/employment in Cyprus and no more than 183 days in any other single country; the condition of not being a tax resident of another country was abolished from 2026.
Is it necessary to buy real estate?
For non-dom — no. For fast-track permanent residency through investment — from €300,000 in real estate. These are different things: tax status and immigration status.
Cyprus remains a place where 0% on passive income combines with EU membership and predictable law. The 2026 reform confirmed this: thresholds shifted, but non-dom and the 60-day rule are intact, and those who hit 17 years now have a paid way out to 27. Neighbouring regimes — the Greek non-dom at €100,000 a year or the Spanish Beckham Law — solve similar problems in their own way, and the choice comes down to income structure and relocation plans.
Primary source: Cyprus — Individual taxes on personal income and residence (PwC Tax Summaries)