Cyprus has a reputation as a low-tax base for people with savings, and much of that reputation rests on one status. It is real and valuable for people with dividend or interest income, but it is narrower than the slogans suggest. Cyprus non-dom status covers one family of taxes, and it sits next to separate salary exemptions that are often confused with it. Here is what the law says in 2026, after the tax reform that came into force on 1 January.
What does non-dom mean in Cyprus?
Cypriot law separates two ideas. Tax residence is a question of days; see Cyprus tax residency and income tax. Domicile is a question of where your long-term home is in the legal sense. You can be tax resident (and pay income tax) without being domiciled in Cyprus. That is a non-dom.
Practically, a non-dom is exempt from the Special Defence Contribution (SDC) on dividends and interest. The SDC is due only by people who are both tax resident and domiciled in Cyprus. Until the 2025 tax year, rent was in the list too; from 2026 there is no SDC on rent for anyone. For domiciled residents, the 2026 rates are 5% on dividends (17% on dividends paid out of profits up to the 2025 year, during six years) and 17% on interest (law 245(I)/2025). Non-domiciled and non-resident people pay none of these.
Who counts as domiciled?
If your domicile of origin is not Cypriot, you are not domiciled in Cyprus unless you have been tax resident for at least 17 of the last 20 years. At that point you are deemed domiciled, whatever your origin.
If your domicile of origin is Cypriot, you cannot claim non-dom, unless you have lived outside Cyprus for twenty consecutive years. Confirming your domicile is a legal judgement, not a form tick. The Tax Department publishes questionnaires, T.D.38QA and T.D.38QB, to help.
How do you claim Cyprus non-dom status?
- Become tax resident and get your tax number; see the Cyprus tax identification number guide.
- File form T.D.38, the declaration of exemption as a non-domiciled person, with your bank or paying company so they do not withhold the SDC. If you earn interest, do it as soon as you open the account.
- Declare the status in your annual return.
- After 17 years of residence out of 20, decide whether to extend: if your domicile of origin is not Cypriot, you can keep non-dom status for up to two periods of five years by paying €250,000 per period, using form TD 631. The application must be accepted by the Tax Commissioner and filed no later than 30 June of the first year of the period. The payment is one-off, non-refundable and cannot be credited against other taxes.
What are the 20% and 50% salary exemptions?
These are separate from non-dom and depend on your employment, not your domicile. The law sets no tax-residence condition for either.
- 20% exemption (article 8(21A)). For a first employment in Cyprus starting between 26 July 2022 and 31 December 2027, if you worked abroad for a non-Cypriot employer during the three consecutive years just before. The exemption is 20% of the pay or €8,550 a year, whichever is lower, and lasts seven years from the year after you start, or until that first job ends. There is no minimum salary.
- 50% exemption (article 8(23A)). For a first employment in Cyprus starting from 1 January 2022 (or a job after 15 consecutive years without employment in Cyprus) paying more than €55,000 a year, if you were not Cypriot tax resident during the 15 consecutive years just before that first employment. It lasts 17 years from the year the job starts and cannot be combined with the 20% exemption. People who already benefited before the 2023 amendment keep the conditions of that time.
- 25% exemption for returning residents (article 8(21B)). For people who were tax resident in Cyprus in the past, but not during the seven years before their return, and who start a job or activity in Cyprus between 2025 and 2030. It covers 25% of the pay or profits, up to €25,000 a year, for at most seven years, once in a lifetime, with conditions on prior full-time work abroad and on income in the first twelve months.
The older 8(23) regime applied to jobs starting up to July 2022, for ten years, with a €100,000 threshold. You declare the exemption on your return and, for monthly payroll, with your employer through T.D.59. Our guide to working in Cyprus puts these in the wider job context.
What does non-dom not do?
- It does not exempt income tax. The normal bands apply to your salary and other income.
- It does not touch foreign pensions. Any tax resident, domiciled or not, can choose each year to tax a foreign pension at 5% on the part above €5,000 (from 2026) or under the normal bands. Read retiring in Cyprus.
- It does not apply automatically. You must file the form and keep the evidence.
What are the common mistakes?
- Mixing residence and domicile. They are two tests with different consequences.
- Assuming the 20% exemption is open to everyone. It needs three prior years of work outside Cyprus for a non-Cypriot employer and a first job in Cyprus.
- Not planning the 17-year clock. If you intend to stay long, count the years from the start.
- Relying on a social-media screenshot. The conditions have dates and thresholds; check them on the Tax Department site and in the law.
Does your nationality change anything?
All newcomers, whether from the EU, the EEA, Switzerland or the UK (Scots included), can qualify if they meet the conditions; only the right to stay differs. People of Cypriot origin face the domicile issue above. See also moving to Cyprus from the UK.
What about the north of the island?
These regimes are part of the Republic of Cyprus's tax law and apply in the area it controls. The northern part of the island is outside the scope of this guide.
What does Cyprus non-dom status change in practice?
The status matters in proportion to your savings income. A domiciled resident pays the SDC on every dividend and interest payment at the rates above; a non-dom with T.D.38 on file with the payer pays none. If you live on a salary with little interest or dividend income, the status changes almost nothing for you, and the salary exemptions are the regimes to look at.
The clock is the other half of the picture. Count your years of tax residence from your first year in Cyprus: at 17 years out of 20 you become deemed domiciled, and only the paid extension, if your domicile of origin is not Cypriot, keeps the status for longer. The law caps it at two periods of five years.
What evidence should you keep for Cyprus non-dom status?
- Proof of your domicile of origin, and of any change you claim.
- The completed T.D.38 and, where relevant, the T.D.38QA or T.D.38QB questionnaire.
- A day-count record for each year, to show how long you have been tax resident.
- Your annual returns and the statements of dividends and interest.
If the Tax Department asks questions, these documents answer them.
What is a sensible next step?
Write down your arrival date, your domicile of origin and the date your job starts. Before you commit, have your eligibility confirmed by a tax adviser or a chartered accountant in Cyprus: with those three facts, they can tell you which status and which exemption apply to you. Bring your registration certificate, your tax number and, if you work, your employment contract to that meeting. Then file T.D.38 early and keep the documents together.