Cyprus Tax Residency in 2026

Updated: April 21, 2026

An individual is considered a Cyprus tax resident if they meet one of the following criteria:

spend more than 183 days in Cyprus within a calendar year; or
qualify under the “60-day rule”.

The 60-day rule is designed for individuals who maintain genuine economic ties to Cyprus without residing there for most of the year.

The legal framework is based on the Income Tax Law (Law 118(I)/2002), as amended, including the 2017 amendment introducing the 60-day rule and the 2025 tax reform, effective from 1 January 2026.

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Key Changes from 2026

Cyprus introduced a tax reform approved on 22 December 2025, effective from 1 January 2026.

Main updates include:

simplification of the 60-day rule (removal of the “not tax resident elsewhere” requirement);
reduction of SDC on actual dividend distributions for domiciled individuals from 17% to 5% (for post-2026 profits);
abolition of SDC on rental income;
abolition of deemed dividend distribution (DDD) for profits from 2026 onwards;
introduction of a lump-sum extension option for non-dom status;
increase of the personal income tax-free threshold from €19,500 to €22,000.

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How to Qualify Under the 60-Day Rule

To qualify as a Cyprus tax resident under the 60-day rule in 2026, an individual must meet all of the following conditions:

stay in Cyprus for at least 60 days during the tax year;
not spend more than 183 days in any other single country;
carry out business activities, employment, or hold a directorship in a Cyprus tax-resident company;
maintain a permanent residence in Cyprus.

Previously, individuals also had to prove they were not tax residents in any other country. This requirement was removed as of 2026.

In cases of dual tax residency, the issue is resolved using tie-breaker rules under applicable double tax treaties.

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Main Tax Advantages

Cyprus offers several tax benefits to individuals:

no income tax on dividends;
no income tax on interest;
no wealth tax;
no inheritance or gift tax.

Cyprus tax residents are generally taxed on their worldwide income, subject to specific exemptions.

Key Exemptions

Non-domiciled individuals (non-doms) are exempt from tax on dividends and passive interest (only a 2.65% health contribution applies, capped at €180,000 annually).
Profits from the sale of securities are tax-exempt (except where linked to Cyprus immovable property).
High-earning employees (over €55,000 annually) may benefit from a 50% income tax exemption for up to 17 years.
Employment exercised abroad is exempt if it exceeds 90 days per year.

Domicile in Cyprus

Domicile can arise in two ways:

Domicile of origin – acquired at birth;
Domicile of choice – acquired by establishing permanent residence with the intention to remain.

For SDC purposes, an individual is deemed domiciled in Cyprus if they have been a tax resident for at least 17 out of the last 20 years.

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What Is Non-Dom Status?

A Cyprus non-dom is a tax resident who is not considered domiciled in Cyprus.

To qualify:

the individual must be a Cyprus tax resident;
must not have a Cyprus domicile of origin or choice;
must not have been a Cyprus tax resident for 17 of the last 20 years.

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Non-Dom Tax Benefits

Non-dom status provides exemption from SDC on:

dividend income;
interest income;
rental income (abolished for all residents from 2026).

However, non-doms are still subject to:

personal income tax;
capital gains tax (where applicable);
healthcare contributions (GeSY).

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Duration of Non-Dom Status

The standard duration is 17 years.

From 2026, individuals may extend the regime:

for two additional 5-year periods;
at a cost of €250,000 per period.

This allows for a maximum of 27 years of benefits.

Special Defence Contribution (SDC)

SDC applies only to domiciled tax residents:

5% on dividends (from profits generated after 1 January 2026);
17% on dividends (pre-2026 profits, transitional until 2031);
17% on interest;
3% on bond interest.

Non-domiciled individuals are fully exempt from SDC.

Abolition of Deemed Dividend Distribution (DDD)

From 2026, Cyprus companies are no longer required to apply deemed dividend distribution on profits.

This mainly impacts domiciled shareholders. Non-doms were already exempt.

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New Tax Regimes

Crypto Assets

flat tax rate of 8% on disposals;
losses can only offset gains within the same year;
mining remains subject to standard income tax.

Employee Stock Options

approved schemes taxed at a flat 8%;
non-approved schemes taxed under normal income tax rules.

Capital Gains Tax (CGT)

CGT applies only to:

Cyprus immovable property;
shares in companies deriving value from such property.

Rate: 20%.

From 2026:

threshold reduced — CGT applies where at least 20% of company value is linked to Cyprus real estate (previously 50%).

CGT Exemptions

Updated lifetime allowances:

€30,000 — general disposals;
€50,000 — agricultural land;
€150,000 — primary residence.

These are lifetime, not annual, exemptions.

Obligations of Non-Doms

Non-domiciled residents must still pay:

income tax (with applicable exemptions);
capital gains tax;
local municipal taxes;
healthcare contributions.

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How It Works for Expats

For expatriates relocating to Cyprus, taxation typically consists of four elements:

Tax residency — under the 183-day or 60-day rule
Non-dom status — exemption from SDC
50% employment exemption — for qualifying new employees
Foreign pension regime — option between progressive rates or 5% flat tax

The overall tax position depends on income structure, country of origin, and applicable double tax treaties. A case-by-case assessment is recommended before making relocation decisions.