7 Taxes You Stop Paying as Non-Dom in Cyprus (2026)
Non-Dom status in Cyprus means you stop paying several taxes that residents of most EU countries cannot avoid. Here are the 7 taxes you stop paying - or that were never charged to begin with - when you become a Non-Dom resident of Cyprus.
Note: some of these exemptions apply to all Cyprus residents, not just Non-Dom. Where relevant, this is noted.
How Non-Dom Status Works in Cyprus
Non-Dom (Non-Domiciled) status is a category under Cyprus tax law that exempts individuals from the Special Defence Contribution (SDC) on passive income. It applies to individuals who were not domiciled in Cyprus at birth and have not been resident in Cyprus for 17 or more of the last 20 years.
To qualify, you must first establish Cyprus tax residency - either by spending 183+ days per year in Cyprus, or via the 60-day rule if you are not tax resident elsewhere. Once tax resident, you confirm Non-Dom status by filing your first Cyprus tax return and demonstrating that your domicile of origin is outside Cyprus.
Non-Dom status is not an application or approval process in the same way as some other regimes. It is a legal status confirmed at the tax filing stage. The clock starts from your first year of Cyprus tax residency, and you retain Non-Dom status for up to 17 years before becoming deemed domiciled.
The practical result is a significant reduction in the effective tax rate on investment income. The combination of SDC exemptions and the broader Cyprus tax environment - no inheritance tax, no wealth tax, no capital gains on securities - creates a package that is difficult to replicate within the EU.
Full eligibility and setup: /learn/non-dom
Taxes Removed by Non-Dom Status (SDC Exemptions)
1. Dividend Tax (Special Defence Contribution)
Non-Dom residents are fully exempt from the 17% Special Defence Contribution (SDC) on dividend income - from any source, any amount.
Standard Cyprus-domiciled residents pay 17% SDC on all dividend income received. Non-Dom individuals are categorically exempt. This is the primary financial reason most relocating entrepreneurs choose Cyprus.
On EUR 200,000 of annual dividends: a domiciled resident pays EUR 34,000 SDC. A Non-Dom resident pays EUR 0 SDC, plus only 2.65% GHS (EUR 4,770 after the EUR 180,000 cap).
Full Non-Dom guide: /learn/non-dom
2. Interest Income Tax (SDC)
The 30% SDC on interest income from bank deposits, bonds, and similar instruments does not apply to Non-Dom residents.
Domiciled Cyprus residents pay 30% SDC on interest income - one of the highest rates on passive income in the EU. Non-Dom residents are exempt from this entirely.
This is particularly relevant for individuals holding significant bond portfolios or high-yield savings accounts. The combination of 0% SDC on interest and 0% SDC on dividends makes Cyprus exceptional for passive income investors.
Dividend and interest tax explained: /learn/dividend-tax
Taxes That Do Not Exist in Cyprus (Applies to All Residents)
The following taxes do not exist in Cyprus for any resident - Non-Dom or otherwise. They are structural features of the Cyprus tax system, not specific to Non-Dom status.
3. Capital Gains Tax on Securities
Cyprus does not tax capital gains on shares, bonds, or other securities. This applies to all Cyprus residents, not just Non-Dom.
The disposal of shares in any company - public or private, Cyprus or foreign - is not subject to capital gains tax in Cyprus. This includes startup exits, investment portfolio disposals, and secondary share sales.
Note: CGT does apply to Cyprus immovable property. The exemption is specifically for securities and financial instruments.
Full CGT rules: /learn/capital-gains-tax-cyprus
4. Inheritance Tax
Cyprus abolished inheritance tax in 2000. There is no estate duty, succession tax, or inheritance tax of any kind.
Assets passed to heirs on death - property, shares, cash - are not subject to any inheritance tax in Cyprus. This applies to all Cyprus residents and to Cyprus-sited assets regardless of the owner's residency.
Compare: the UK charges inheritance tax at 40% above the nil-rate band. Germany charges up to 50% for non-direct heirs. Cyprus: 0%.
5. Wealth Tax
There is no annual wealth tax in Cyprus. No tax is levied on the value of assets held.
Several EU countries impose an annual tax on net wealth above a threshold - Spain up to 3.5%, Norway 1.1%, Switzerland at cantonal level. Cyprus has never had a wealth tax.
This matters for high-net-worth individuals holding substantial assets: there is no annual erosion of capital through wealth taxation in Cyprus.
6. Exit Tax on Leaving Cyprus
Cyprus does not impose exit tax when you leave the country. Your assets are not deemed disposed of on departure.
Germany, France, Spain, and several other EU countries impose exit taxes on individuals who move abroad while holding unrealised gains in company shares. Cyprus has no equivalent legislation.
This makes Cyprus a straightforward place to leave if your circumstances change - unlike some other jurisdictions where exit requires complex tax planning.
Compare with Spain exit tax: /blog/uk-exit-tax
7. Withholding Tax on Foreign Dividends Received
Cyprus does not withhold tax on dividends received from foreign companies by a Cyprus Non-Dom individual.
When a Non-Dom individual receives dividends from a foreign company directly, no withholding tax is levied in Cyprus. Combined with Non-Dom SDC exemption, the Cyprus-level tax on those dividends is only 2.65% GHS.
This is separate from withholding tax in the source country - some countries deduct tax at source before paying dividends, and treaty relief may be needed.
Double tax treaty network: /learn/double-tax-treaties-cyprus
Non-Dom Tax Exemptions: At a Glance
| Tax | Standard Rate | Non-Dom Rate | Applies to All? |
|---|---|---|---|
| Dividend tax (SDC) | 17% | 0% | No - Non-Dom only |
| Interest tax (SDC) | 30% | 0% | No - Non-Dom only |
| Capital gains (securities) | 0% | 0% | Yes - all residents |
| Inheritance tax | 0% | 0% | Yes - abolished 2000 |
| Wealth tax | 0% | 0% | Yes - never existed |
| Exit tax | 0% | 0% | Yes - no exit tax |
| WHT on foreign dividends | 0% | 0% | Yes - no WHT |
Frequently Asked Questions
What taxes does Non-Dom status exempt you from in Cyprus?
Non-Dom status exempts you from the 17% Special Defence Contribution on dividends and the 30% SDC on interest income. Combined with Cyprus having no CGT on securities, no inheritance tax, and no wealth tax, the effective tax burden on investment income is very low.
Does Non-Dom status reduce income tax on salary in Cyprus?
No. Non-Dom status does not affect the personal income tax rates on employment income. It only applies to the Special Defence Contribution on passive income (dividends and interest). The standard Cyprus income tax scale (0-35%) still applies to salary.
How long does Non-Dom status last in Cyprus?
Non-Dom status lasts until you have been a Cyprus tax resident for 17 of the last 20 years. At that point you become deemed domiciled and SDC applies. The 17-year window starts from first year of Cyprus tax residency.
Can you lose Non-Dom status before 17 years?
Yes. Non-Dom status is lost if you voluntarily acquire a domicile of choice in Cyprus, or if you reach the 17-year deemed domicile threshold. Leaving Cyprus for a long period and then returning resets some calculations - specific advice is needed for complex situations.
What is the effective tax rate for Non-Dom residents in Cyprus?
For dividend income, the effective rate is approximately 5%: 15% corporate tax on company profits, then 2.65% GHS on dividends distributed to the Non-Dom individual (capped at EUR 180,000 insurable income). No SDC applies.
Sources: PwC Cyprus Tax Facts 2026, Cyprus Tax Department.
Need personalized advice? Book a consultation with an expat tax specialist.
Sources: PwC Cyprus Tax Facts 2026, Cyprus Tax Department.
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