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Cyprus is a popular island in the Mediterranean and has in recent years become one of the few Tax havens developed within the European Union. Because in addition to the great weather and nature, Cyprus has created a tax framework that allows numerous entrepreneurs to pay little to no taxes.
The following explains the tax benefits Cyprus offers, what requirements are necessary for this, and how one can best utilize them for oneself.
Taxes in Cyprus
The „Non-Domiciled“ (Non-Dom) status in Cyprus offers significant tax advantages for individuals who move to Cyprus, but do not want to establish their permanent tax residence there. Here are the main tax benefits of the non-dom status in Cyprus based on the current tax reform.
Income
Although Cyprus is considered a tax haven in Europe, it levies relatively high income taxes. While there is a tax-free allowance of around €22,000 per year that is not taxed, tax must be paid on any amount above that. Below is an overview of the specific income tax rates, including those for Non-Doms:
- up to €22,000: 0 %
- €22,201 to €32,000: 20 %
- €32,001 to €42,000: 25 %
- €42,001 to €72,000: 30 %
- more than €72,001: 35 %
That means that as a high-income earner, you quickly end up in the top tax bracket and pay 35 % in income tax.
Dividends
Individuals with non-dom status in Cyprus are exempt from the Special Defence Contribution (SDC) on dividends. This means they do not have to pay taxes on dividends they receive worldwide.
However, dividends from domestic and foreign sources are subject to GESY. This is a health insurance contribution of 2,65%. The maximum limit here is 4,770 €, which is reached with a distribution of 180,000 €. Beyond that, there are no further taxes to pay.
Interest income
Similar to dividends, interest income for non-dom individuals in Cyprus is exempt from the SDC. This includes interest on bank accounts and other investments.
Tax on rental income
Rental income from real estate in or outside of Cyprus is fully subject to income tax and the progressive tax rate. Anyone who owns real estate in Germany, Austria, or another country must observe the double taxation agreement. This is because, in the case of foreign real estate in DTA countries, the country where the real estate is located has the right of taxation.
Capital gains
Capital gains from the sale of securities, including stocks, bonds, and other financial instruments, are tax-free for non-dom individuals in Cyprus. Excluded from this is active trading or day trading. Thus, wealth accumulation through stocks and the like is particularly favored in Cyprus. This is also the reason why many investors live in Cyprus.
Cryptocurrencies
Since 2026, there has been clarity regarding taxes on cryptocurrencies in Cyprus. These are now taxed at a flat rate of 8 %. Losses can only be offset against gains in the same year, but not against gains from the previous year. Thus, while Cyprus is crypto-friendly, there is no complete tax exemption as there is, for example, in Dubai.
This new regulation applies to all those who reside in Cyprus, including non-doms.
Corporate tax (corporate income tax)
One of the most important developments and changes in 2026 was the increase in the corporate income tax rate from 12.5 % to 15 %. This affects all those who have a Companies in Cyprus want to establish in order to emigrate. Attention: Anyone who wants to set up an offshore company, such as a US LLC or a Freezone company, cannot simply bypass this.
Further changes
The deemed dividend distribution has been abolished, the loss carryforward has been extended from 5 to 7 years, and the non-dom status can be extended by 5 years at a time after 17 years for a flat fee of €250,000.
Requirements for non-dom status
To obtain non-dom status in Cyprus, certain criteria must be met:
Tax residency in Cyprus
The person must be a tax resident in Cyprus. This means they spend at least 183 days a year in Cyprus.
Alternatively, a person can also be considered a tax resident if they spend less than 183 days in Cyprus, but meet the following criteria:
- She spends at least 60 days in Cyprus.
- She has professional or business activities in Cyprus, works for an employer in Cyprus, or holds an office in a Cypriot company.
- She maintains an apartment in Cyprus that is owned or rented by her.
- She spends no more than 183 days in another country.
No Domicile of Origin in Cyprus
The person must not be of Cypriot origin by birth (Domicile of Origin). This means that their father should not be of Cypriot origin or, if he is, the person themselves must have left the country before reaching the age of majority and have lived permanently in another country ever since.
No Domicile of Choice in Cyprus
A person who has resided in Cyprus for an extended period (typically at least 17 of the last 20 years) is considered domiciled in Cyprus (Domicile of Choice). Individuals who meet this criterion cannot claim non-dom status.
Example for entrepreneurs
A foreign entrepreneur living in Cyprus, but deriving income from dividends, interest, and capital gains from their home country or other countries, can apply for non-dom status. This means they can enjoy this income tax-free in Cyprus as long as it is not remitted to Cyprus.
If the dividend income comes from a Cyprus Ltd, a GESY contribution is required as described above. In practice, the calculation looks like this:
Company profit: 100.00 €
Corporate Income Tax: - €15,000
GESY – 2,252.50€
This results in a net taxable income at the individual level of €82,475, which corresponds to a tax burden of 17.52 %.
Tax calculator for Cyprus
Below is a practical tax calculator to quickly calculate the tax for expats or non-doms.
Global Setup · Cyprus
Estimate your tax burden as a non-domiciled tax resident in Cyprus based on the 2026 tax reform.
earned income
0 – 35%Corporate profit
15%If you distribute the profit as a dividend, also enter the amount under „Local Dividends“.
Dividends
Non-Dom: 2,65%Any potential foreign withholding tax is not taken into account here (may be reducible via a DTA).
Crypto gains
8%Flat 8% (Art. 20E, effective 2026) on sales, exchanges, or payments. Losses may only be offset against crypto gains from the same year. Mining is excluded.
Capital gains
0% / 20%For simplicity's sake, indexation of acquisition costs (inflation adjustment) is not taken into account here.
Effective tax rate
Note: Non-binding estimate based on the Cypriot tax reform effective as of January 1, 2026 (Income tax 0–35% with a tax-free allowance starting at €22,000, corporate income tax 15%, Non-Dom 0% SDC + 2.65% GESY on dividends, GESY cap at €180,000 income, crypto 8%, CGT 20% only on real estate in Cyprus). This calculation replaces no individual tax advice. Social security, withholding taxes, DTT crediting, and special cases are not covered. For a binding assessment, please book a consultation.
Summary
The non-dom status in Cyprus offers significant tax advantages, particularly regarding dividends, interest income, rental income, and capital gains. Due to the attractive tax environment and the opportunity to receive foreign income tax-free, Cyprus is an attractive location for international business people and wealthy individuals.
