Cyprus non dom program: what the rules say, end to end

The mechanism, in one paragraph

Dividend income is exempt from Cyprus income tax for every resident under section 8(20) of the Income Tax Law. From 2026 all interest income of individuals is exempt from income tax too. What remained chargeable on both was the Special Defence Contribution, and for that law a "resident" means someone who is Cyprus tax resident under the Income Tax Law and domiciled in Cyprus. A resident who is not domiciled here falls outside the charge entirely.

So the result is arrived at by subtraction. Income tax does not reach dividends because of an exemption; the defence contribution does not reach them because of your domicile. Nothing was granted to you; two charges simply do not apply.

What domicile means here

Domicile is not residence and not nationality. A Cyprus domicile of origin generally makes you domiciled, with exceptions: a domicile of choice abroad plus twenty consecutive years of non-residence, or twenty or more years abroad before 16 July 2015. Most people moving to Cyprus from elsewhere arrive non-domiciled, which is why the regime works for new arrivals and not for returning Cypriots.

On top of that sits deemed domicile. Whatever your domicile of origin, you are treated as domiciled once you have been Cyprus tax resident for at least 17 of the 20 years before the tax year. Once deemed domiciled, it lasts until you complete twenty years of non-residence.

Cyprus non dom program: what it is worth, with the contrast

One transitional detail that catches people in their first year. Dividends paid by a Cyprus company out of profits of tax year 2025 or earlier, received within six years of 1 January 2026, stay at the old 17% defence contribution rate for a domiciled resident. That window runs to 31 December 2031 and is a reason to know which year's profits a distribution comes out of.

The 17 years, and the EUR 250,000 door at the end

The count starts with your first year of Cyprus tax residence. Years before you moved do not count against you, so a founder arriving at 35 reaches deemed domicile in their early fifties at the earliest, and only if they stay resident continuously.

Since 2026 there is an alternative for the year the clock runs out. A person without a Cyprus domicile of origin who becomes deemed domiciled may elect a flat defence contribution of EUR 50,000 a year, paid as one EUR 250,000 payment covering a five-year period, irrevocable for those five years, available for up to two periods. The election is made on a prescribed form by 30 June of the first year of the period, and the payment is due by the end of the month after approval. Miss either date and the election falls away.

Whether that is worth paying is arithmetic: EUR 250,000 over five years against 5% of five years of dividends. It stops being a bargain below about EUR 1,000,000 of dividends a year.

What the regime does not touch

• The health contribution. It follows tax residence, not domicile: 2.65% on dividends and interest, capped once annual income reaches EUR 180,000, so at most EUR 4,770 a year.
• Salary. Pay from a Cyprus job is taxed on the normal bands, which start at 0% up to EUR 22,000 and reach 35% above EUR 72,000.
• Cyprus property. Gains pay 20% capital gains tax, and from 2026 the look-through to shares in property-rich companies starts at a 20% holding rather than 50%.
• Crypto. Disposals are taxed at a flat 8% from 2026, separately from other income.
• Your other country. Non-dom status is a Cyprus answer. Whether your previous country of residence accepts that you left is decided by its law, not by this one.

Where to go next

Two things have to be true in the same tax year before any of this applies: you are Cyprus tax resident, and you have claimed non-dom status with the Tax Department. The first is the 60-day rule or the 183-day rule. The second is form TD38.