Cyprus Tax Residency and Non-Domicile Status: Benefits for Investors

Purchasing real estate in Cyprus is often the first step toward obtaining tax residency in the republic. In 2026, Cyprus remains one of the most attractive tax havens in Europe thanks to its unique non-domicile status. This program was developed specifically to attract foreign investors, highly-paid professionals, and entrepreneurs. It allows for a legal and radical reduction in the tax burden on personal income received from sources worldwide, while maintaining all the benefits of residency in a European jurisdiction.

The 60-day rule and conditions for obtaining residency

There are two ways to become a tax resident in Cyprus. The first is the classic route, which requires physical presence on the island for more than 183 days per year. However, for active investors and businessmen, the “60-day rule” is more relevant in 2026. To take advantage of this route, a number of conditions must be met:

• Stay in Cyprus for at least 60 days during a calendar year.
• Not be in any other country for more than 183 days and not be a tax resident of another country.
• Conduct business in Cyprus, work for a local company or hold the position of director of a resident company.
• Own or lease residential property on the island for a long term.

This rule allows investors to remain mobile while managing international assets and at the same time benefiting from all the tax benefits of the Cypriot system.

Non-Domicile status benefits for foreigners

Non-domicile status is granted to individuals who have become tax residents of Cyprus but were not born on the island and have not resided there for 17 of the last 20 years. This is a key element of tax planning. Beginning in 2026, holders of this status will be completely exempt from paying the Special Contribution for Defense (SDC), which is a significant amount for ordinary residents.

For Non-Dom residents in Cyprus the tax is 0% on the following types of income:

• Dividends from companies anywhere in the world.
• Interest income (for example, interest on bank deposits or loans).
• Income from the sale of securities (shares, bonds and other financial instruments).

This makes Cyprus an ideal location for holding structures and individuals whose main capital operates in the financial sector or international business.

Worldwide Income Taxation and Salary Benefits

While investment income may be tax-exempt, active income (such as wages) is subject to progressive taxation. Since 2026, Cyprus has had an increased tax-exempt minimum of €22,000. Additional incentives are available for professionals relocating to the island. If their annual salary exceeds €55,000, they are entitled to a 50% income tax exemption for the first 17 years of employment in Cyprus. This makes the island a powerful magnet for top management and leading IT developers, whose net profits after tax are significantly higher than in Germany, France, or the UK.

Contributions to the State Tax Institution: an exception to the tax holiday rules

It’s important to remember that non-domicile status does not exempt you from contributions to the General Health System (GESI). Even if you don’t pay special defense contribution (SDC) on dividends or interest, you are still required to pay a GESI contribution at a rate of 2.65% of such income. However, there is an annual limit: contributions are only charged on the first €180,000 of your total annual income. Anything above this threshold is exempt from health system contributions. This limit allows high-net-worth investors to accurately forecast their social security costs.

Registration procedure and annual confirmation

Tax residency and non-dom status are not granted automatically; they must be obtained through the Cyprus Tax Department. The process involves submitting forms, confirming lease or ownership of real estate, and providing proof of business activity on the island. Since 2026, Cyprus tax authorities have begun to more closely verify economic substance, so it is important to retain proof of travel, utility bills, and documents confirming the performance of duties as a company director or employee. It is recommended to obtain a Tax Residency Certificate annually, which serves as official confirmation of your status for tax authorities in other countries.

Long-term planning and exit from status

Non-domicile status is granted for up to 17 years. This period is sufficient for implementing long-term investment strategies and accumulating capital under a virtually zero-tax regime. After this period, the resident is considered “domiciled” and begins paying taxes on a regular basis. However, even in this case, the Cypriot system remains competitive due to the absence of wealth, gift, and inheritance taxes. Careful transition planning and asset distribution within family structures allow for a high level of financial efficiency to be maintained even after the non-domicile tax exemption period ends.