In an effort to enhance the competiveness, fairness and simplicity of the Cyprus Tax system and make it more attractive to foreign investors, the Cyprus Government passed on the 9th of July 2015 among others the introduction of “Domicile” concept. The introduction of the non-domicile rules aims to at-tract high-earners relocate to Cyprus and use Cyprus as a business centre, by transferring the head-quarters of their business and creating real substance.

The Case before the Amendment of the Law

An individual who spends a period or an aggregated period of more than 183 days in a tax year in the Republic of Cyprus is subject to both Income Tax and Special Defence Contribution (SDC).

Domestic or foreign-sourced income of a Cyprus resident, taking the form of dividends, interest or rent was subject to SDC.

The Amendment of the Special Defence Contribution

According to the amendment of the Law and the non-domicile rules introduced, an individual who is a tax resident of Cyprus under the provisions of the Income Tax Law (183 days rule mentioned before) BUT he is “not-domiciled” in the Republic of Cyprus, will be exempt from SDC.