The non-dom status in Cyprus isn’t just a technical tax term—it’s the solution that many are seeking to escape the oppressive tax burden that has come to define Europe today. Let’s be honest: the tax situation in Europe isn’t looking good. Laws change constantly, taxes rise at an alarming rate, and Cyprus has become the refuge for those who are no longer willing to watch their earnings disappear into taxes and more taxes.
Imagine the typical coffee shop in Madrid, Paris, or Berlin; the conversation is always the same. Entrepreneurs, freelancers, hardworking individuals discussing how new regulations and the crushing tax pressure are suffocating them. And this is where Cyprus steps in. While Europe keeps tightening the reins, this Mediterranean island has chosen to invest in talent, capital, and success, offering a corporate tax rate of 12.5%, one of the lowest in the European Union. But that’s not all. With non-dom status, passive income and dividends for foreigners receive dream-like tax exemptions.
Cyprus’s tax system isn’t just highly competitive; it’s also stable and predictable, without the unpleasant surprises we’ve come to expect in other places. It’s no surprise, then, that many of our clients choose to settle on this beautiful island. Today, we bring you a blog featuring the most common questions and answers from our consultations about Cyprus. Let’s dive in!
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What is Non-Dom Status in Cyprus and What Tax Benefits Does It Offer?
The non-dom status in Cyprus is, in a word, freedom. This status is the key that unlocks the doors to a much more manageable tax system, especially for those who don’t want their passive income to fall into the hungry hands of the tax authorities. What are we talking about? For 17 years—yes, almost two decades—non-domiciled individuals in Cyprus can enjoy impressive tax exemptions on their passive income and dividends, paying only 2.65% in taxes on dividends and, in many cases, nothing on capital gains.
Think about it. Instead of watching your investments diminish due to the brutal tax systems we are accustomed to in other countries, in Cyprus, your money really stays with you. You only need to prove that you are a tax resident—which is relatively simple compared to the requirements of other European countries—and that’s it. You can breathe easy, knowing that your hard work and capital are in a safe and tax-friendly environment.
Who qualifies for this non-dom status? Foreigners who spend at least 60 days a year in Cyprus, who do not have tax residency in another country, and who own or rent a property on the island. With these minimal requirements, Cyprus has created such an attractive tax formula that it has caught the interest of entrepreneurs, investors, and digital nomads from around the world.
What are the Tax Advantages of Being Non-Dom in Cyprus?
Being non-dom in Cyprus not only means paying less tax; it means keeping your money where it truly belongs: in your hands, not in the tax authorities’ coffers. As we mentioned at the beginning, Cyprus has become a magnet for those who appreciate the difference between paying what’s fair and being squeezed dry.
As a non-dom, income from dividends, interest, and rents is exempt from the “Special Defense Tax” (SDC) that in other countries would cost you 17%. Here, you only need to contribute a symbolic 2.65% to the health system (GESY) on dividends, with a cap of 4,770 EUR. So, even if your dividend income is 500,000 EUR, you won’t pay a single euro more than that maximum amount.
Furthermore, Cyprus is one of the few European countries without wealth taxes, which is a key advantage for those looking to protect their wealth from the growing trend of asset taxes in other parts of Europe. With no capital gains tax on the sale of shares and exemptions on dividends and other passive income, this regime creates an ideal tax platform for investors and entrepreneurs looking to grow their wealth without surprises.
And best of all, Cyprus offers fiscal stability that is already rare in Europe, with a fixed corporate tax rate of 12.5%. While other places continuously invent new ways to collect revenue, here you find clear rules. The conclusion? Cyprus understands how to create an environment where money flows, not stops.
How Can I Apply for Non-Dom Status in Cyprus?
Obtaining non-dom status in Cyprus isn’t a fiscal maze like in other places. In reality, the process is quite straightforward and designed to facilitate the lives of those looking to optimize their tax situation on the island.
First, you need to become a tax resident of Cyprus, and for this, you have two options:
- The 183-Day Rule, which requires you to spend at least that number of days in Cyprus within a tax year.
- The 60-Day Rule, much more flexible and attractive, especially for nomads and entrepreneurs. With this rule, you only need to spend 60 days in Cyprus each year, as long as you are not a tax resident in another country and have a property or rental in the island. You also need some economic connection, such as employment, a business, or a position as a director in a Cypriot company.
Once you meet one of these criteria, you can apply for non-dom status. The basic documentation includes a lease contract, proof of income, social security registration, and a copy of your passport. You will also need the “Yellow Slip” of immigration. With all these documents in order, the application for non-dom status is processed smoothly in most cases.
And then? After obtaining the status, you can start benefiting from the tax advantages of Cyprus, such as the exemption from the special defense tax (SDC) on dividends and interest, and access to the national health system (GESY).
What Types of Companies Are Ideal for Foreigners in Cyprus?
For many foreign entrepreneurs, the Limited Liability Company (Ltd) is the preferred option in Cyprus, and it’s not by chance. This structure offers significant tax benefits and operational flexibility, allowing owners to protect their personal assets, as their liability is limited to the capital invested in the company.
This type of company does not require a minimum capital to start, and its incorporation process is relatively quick and straightforward, taking approximately 1 to 2 weeks to be fully operational, provided all documentation is in order.
Another option for those seeking flexibility in their operations is the establishment of a branch office. While it depends on the parent company abroad and cannot operate independently, a branch allows foreign companies to operate under the same name in Cyprus and benefit from local taxation only on income generated on the island.
For some entrepreneurs, there are also options like trusts, which are ideal for estate planning and can provide additional tax and asset protection benefits. This approach is especially popular for those who want a more flexible method of managing their wealth.
How Long Does It Take and What Is Required to Establish a Company in Cyprus?
Establishing a company in Cyprus is not an obstacle course, but there are certain administrative procedures you should be aware of. Generally, the process takes 1 to 2 weeks if you have all the documents at hand and choose a standard option like a Limited Liability Company (Ltd). Let’s go through the most important steps, waiting times, and administrative requirements involved.
- Company Name Reservation
The first step is to ensure that your company name is unique and approved by the Cyprus Registrar of Companies. This process usually takes about 10 business days, and it’s advisable to have alternatives in case the chosen name is not approved. - Incorporation Documentation
Once the name is approved, you must prepare the legal documentation, which includes the Memorandum and Articles of Association of the company. These documents detail the company’s objectives and capital structure and must be drafted in Greek or English. With the help of a legal advisor, this step can be completed in 2 to 3 days. - Company Registration and Obtaining the Registration Number
After preparing the documents, the Registrar of Companies in Cyprus reviews and approves the incorporation, which can take another 25 to 30 days. At the end of this process, the company receives its registration number, allowing it to start operating officially. - Tax Department Registration and, if applicable, VAT Registration
If your company projects annual revenues that exceed the mandatory threshold and operates in Europe, you will need to register for VAT. This registration can add 2 weeks to the process. - Possible Delays
While Cyprus is known for having one of the simplest regulatory environments in Europe, some delays may arise due to the need for additional documents or “Know Your Customer” (KYC) checks.
In summary, with the right documentation and a bit of advice, you can have your company up and running within about 2 months. However, it is possible to expedite this process to 1 month. Message us on WhatsApp and we’ll tell you how.
How Much Does It Cost to Establish and Maintain a Company in Cyprus?
Establishing a company in Cyprus involves some initial costs and annual maintenance expenses that, compared to other European jurisdictions, are quite competitive. Here’s a breakdown of the main costs:
- Registration Cost: Registering a Limited Liability Company (Ltd) in Cyprus generally costs between 2,100 € and 3,000 €, depending on the service provider and level of assistance. Larger law firms can charge up to 4,000 €.
- Annual Maintenance Expenses: These include fees for maintaining a registered office in Cyprus, along with the services of a director, secretary, and registered address, which are mandatory. These costs range from 500 € to 1,200 € per year. If you prefer to keep your ownership anonymous, you can opt for “nominee” services, which will increase these costs.
- Accounting and Audit: All companies in Cyprus are required to submit audited financial reports annually. These services typically cost between 1,800 € and 3,500 € per year, depending on the volume of transactions and the type of auditing firm.
- Annual Government Fee: The annual fee of 350 €, which used to be mandatory, was eliminated in 2024, reducing fixed costs for registered companies in Cyprus.
- Other Potential Expenses: If you need to open a corporate bank account, some institutions charge additional fees to comply with “Know Your Customer” (KYC) requirements. Additionally, any changes to the company’s structure, such as issuing certificates or specific licenses, may incur extra costs.
In total, the estimated annual maintenance cost of a company in Cyprus ranges from 2,500 € to 4,000 €, depending on the required services and the level of activity of the company.
What Makes Cyprus a Good Place to Live and Do Business?
Cyprus not only offers tax advantages but also an enviable living and working environment, positioning it as an ideal destination for entrepreneurs and expatriates. The quality of life here is high, with over 300 days of sunshine a year and a relaxed Mediterranean lifestyle that allows for enjoyment without sacrificing business opportunities. Its climate, safety, and the hospitality of its people make this island a welcoming and secure place for families and professionals.
From a business perspective, Cyprus stands out for its pro-business legal framework based on common law, providing clarity and stability for long-term planning. Its strategic position in the Mediterranean also facilitates access to markets in Europe, the Middle East, and Africa. Additionally, the country boasts modern and efficient infrastructure, from ports and airports to an advanced digital system, making it ideal for technology and international trade companies.
In terms of networking, Cyprus has emerged as a multicultural and talent hub. The island has attracted thousands of international professionals, including tech and finance groups, and continues to host events and conferences that allow for connections with other entrepreneurs and expansion of professional networks. This makes Cyprus ideal for establishing contacts and finding collaboration opportunities across various sectors, from technology to maritime industry.
How Can I Start to Take Advantage of the Tax and Business Benefits of Cyprus?
If you’re considering Cyprus for your company or as a new tax home, the first step is to understand the business and tax structures that will allow you to make the most of this destination. Creating a Limited Liability Company (Ltd) is an ideal strategy for optimizing taxes and reducing your tax burden on passive income and dividends. Additionally, obtaining non-dom status can help you significantly minimize taxes in the long term.
Connecting with local experts is crucial to ensure that each step meets legal requirements and maximizes all the tax advantages that Cyprus has to offer. Nomad Tax can assist you throughout this process, from establishing your company to obtaining tax residency. Our specialized team is here to help you navigate this environment with confidence and strategy.
Ready to take advantage of the tax and business opportunities in Cyprus? Contact us at Nomad Tax, and we’ll guide you through every detail so that your finances and business thrive in a safe and favorable environment.
