Taxes in Cyprus: 2025 Non-Dom Reform & What It Means for Foreigners

Cyprus has long offered a stable, business-friendly tax framework, but after more than twenty years of little change, a new round of reform was being prepared when this guide was written in 2025. The changes are meant to modernise the system, make it fairer and increase transparency. They would affect people seeking non-dom tax residency and those already benefiting from it. This guide explains the current system, what was proposed and how to prepare, with particular relevance for foreign nationals, retirees, remote workers and digital nomads.

How does tax residency work in Cyprus today?

What is the 183-day rule?

If you spend more than 183 days in Cyprus in a calendar year, you are treated as a tax resident. Cyprus is not simply tax free, but it does offer generous benefits.

What is the 60-day rule?

For people who travel often, there is an alternative. To qualify, you must:

• Spend at least 60 days in Cyprus during one calendar year.
• Run a business in Cyprus, or be employed or hold an office with a Cyprus tax resident company.
• Not reside for more than 183 days in any other single country.
• Not be a tax resident of any other country.
• Own or rent a home in Cyprus.

Proving eligibility means submitting documents to the Tax Department, such as passports, lease agreements, utility bills, bank statements and employment certificates, to confirm that your connections to Cyprus are genuine and consistent.

What is non-dom status and who qualifies?

Non-Domicile (non-dom) status is one of Cyprus's most attractive tax incentives, particularly valuable for high-net-worth individuals, retirees and digital professionals.

To be eligible, you must:

• Not have a Cyprus domicile of origin, meaning the domicile you inherit at birth.
• Not have acquired a domicile of choice in Cyprus, meaning permanent residence with an intention to stay indefinitely.
• Not have been a Cyprus tax resident for at least 20 consecutive years before the tax year in question.
• Not have been a Cyprus tax resident for 20 years before 16 July 2015, the date the law was introduced.

What are the benefits of non-dom status?

• An exemption from Special Defence Contribution (SDC) on dividends and interest, whether earned in Cyprus or abroad, for 17 years.
• Suitability for people with global investments or passive income streams.
• It can be combined with either the 183-day or the 60-day residency rule.

What changes were proposed in the 2025 tax reform?

The reforms were developed by the Economics Research Centre of the University of Cyprus, were under discussion and were expected to be submitted to parliament. They were driven by both domestic objectives and EU recommendations.

Tax residency tests

• The 183-day rule will stay as it is.
• The 60-day rule will be tightened, possibly with extra documentation requirements.
• A new residency test may capture people whose centre of business interests is in Cyprus, even if they do not meet the 60-day or 183-day thresholds, following models used in countries such as France.
• Cases of dual tax residency will be resolved according to double tax treaties.

Special Defence Contribution

• The SDC on rental income may be abolished entirely, which would benefit property investors.
• The SDC on dividends could fall from 17% to 5% for residents who are also domiciled in Cyprus.
• The non-dom SDC exemption is expected to remain unchanged.
• A small annual fee may be introduced to extend non-dom benefits beyond the 17-year period.

Personal income tax

• The tax-free threshold is expected to rise from €19,500 to €20,500.
• The top rate of 35% would apply to income above €80,000 rather than €60,000.
• Family-focused tax credits are planned: €1,000 per child or student; €1,500 for first-home residential loans; and €1,000 a year for home energy upgrades, available for up to 5 years.

What does the reform mean for you?

Current non-doms: tax-exempt treatment of dividends and interest will continue for up to 17 years, but once the reforms are passed you may have to pay a nominal annual charge to keep non-dom status.

Prospective non-doms: now may be the ideal time to establish residency, before the rules become stricter. If the proposed business-presence test goes ahead, eligibility could improve if you run a Cyprus-based company, even without long stays.

Digital nomads and remote workers: the 60-day rule will remain workable, but documentation requirements could increase. A strong business or property connection to Cyprus will likely strengthen your application.

How can you prepare for the changes?

• Consult a Cyprus tax advisor now to understand how the changes could affect your situation.
• Keep your paperwork in order. Title deeds, lease agreements, utility bills and business registrations are all key.
• If you are undecided about moving to Cyprus, act before the reforms are enacted.

The reforms are not expected to remove the core benefits that make Cyprus attractive, particularly under the non-dom scheme. Buying a new home? See our guide to the reduced 5% VAT on property in Cyprus.