Cyprus Non-Dom Regime: Zero Tax on Dividends with the 60-Day Rule

The Cyprus non-domiciled (non-dom) tax regime is one of the most favourable personal tax frameworks in the European Union. As a Cyprus non-dom tax resident, you pay zero tax on worldwide dividend income and zero tax on interest income — for up to 17 years.

What Is the Cyprus Non-Dom Regime?

Cyprus imposes a Special Defence Contribution (SDC) on dividend income (17%) and interest income (30%) received by Cyprus-domiciled tax residents. However, non-domiciled individuals are completely exempt from SDC on both dividends and interest — regardless of where the income originates.

This means a Cyprus non-dom pays:

0% on dividends from Cyprus and foreign companies
0% on interest income from any source
0% on gains from disposal of securities (shares, bonds — regardless of non-dom status, this is a general Cyprus exemption)

The 60-Day Rule — How to Qualify

Most people are familiar with the 183-day rule: spend 183+ days in Cyprus and you are automatically a Cyprus tax resident. The 60-day rule is a more flexible alternative introduced in 2017.

To qualify under the 60-day rule, you must:

Spend at least 60 days in Cyprus during the tax year
Not spend 183+ days in any single other country during the year
Not be a tax resident of any other country during the year
Have a connection to Cyprus — either a permanent residence (rented or owned) or carry on a business or employment in Cyprus

This rule is particularly valuable for founders and investors who divide their time between multiple countries.

How Non-Dom Status Is Obtained

Non-domicile status is separate from tax residency. You are non-domiciled in Cyprus if:

You were not born in Cyprus with a Cypriot domicile of origin, or
You have not been a Cyprus tax resident for at least 17 of the last 20 years

For most international entrepreneurs, meeting the non-dom criteria is straightforward — you simply were not born and raised in Cyprus.

Duration and What Happens After 17 Years

Non-dom status lasts for 17 tax years from the date you first became a Cyprus tax resident. After 17 years, you are deemed domiciled in Cyprus and become subject to SDC on dividends (17%) and interest (30%).

Most entrepreneurs restructure their affairs before this point, or have already extracted the majority of their business value.

Comparing Cyprus Non-Dom vs UK Non-Dom

The UK non-dom regime (now substantially reformed) required years of UK residence and had complex remittance basis rules. The Cyprus non-dom regime is:

Simpler — no remittance basis complications; exemption applies to all worldwide income
More accessible — 60-day minimum presence vs UK requirements
More certain — rules have not been subject to the same political instability as the UK regime
Combined with lower personal income tax — Cyprus maximum rate is 35% on €60,000+, vs UK 45%

Combining Non-Dom with Cyprus Company and IP Box

The most tax-efficient structure for a Cyprus-based tech founder is:

Cyprus company with IP Box → 2.5% effective corporate tax on software income
Profits distributed as dividends to non-dom founder → 0% personal tax on dividends
Overall effective rate → approximately 2.5% on IP income

This is the combination that makes Cyprus genuinely compelling for software founders.

Practical Considerations

What taxes do you still pay? Non-dom status only exempts dividend and interest income from SDC. Employment income, rental income, and pension income are subject to regular Cyprus income tax (progressive, 0% up to €19,500, 35% above €60,000).

Do you need to give up your home country residency? To use the 60-day rule, you must not be a tax resident of any other country. This typically means formally exiting your home country’s tax system — which requires specific planning for UK and Israeli residents in particular.