{"id":1122,"date":"2020-07-07T09:24:21","date_gmt":"2020-07-07T09:24:21","guid":{"rendered":"https:\/\/aspentrust.com\/?p=1122"},"modified":"2023-01-04T15:53:32","modified_gmt":"2023-01-04T15:53:32","slug":"the-non-dom-rules-of-cyprus","status":"publish","type":"post","link":"https:\/\/aspentrust.com\/the-non-dom-rules-of-cyprus\/","title":{"rendered":"The Non-Dom Rules of Cyprus"},"content":{"rendered":"\n

Aiming to increase the overall competitiveness and fairness of the tax system for foreign nationals, the Cyprus government introduced the concepts of \u2018domicile\u2019 and \u2018non-domicile\u2019 (Non-Dom) through an amendment<\/a> of the Special Contribution for the Defence of the Republic of Cyprus Law of 2002 (SDC Law) in July of 2015. <\/strong>The Aspen Trust Group<\/a> explores how the Non-Dom rules of Cyprus<\/strong> are the leading factors contributing to a rise in foreign nationals<\/a> choosing the low tax jurisdiction as a place of residence, company registration, and even family relocation. <\/strong><\/p>\n\n\n\n

As an EU member country with a straightforward and attractive tax system, Cyprus has already enticed over 110,000 foreign nationals<\/a> who are currently living on the island, while many more are exploring other options such as company set-up or citizenship-by-investment programs.<\/p>\n\n\n\n

The Establishment of Non-Dom Status<\/h2>\n\n\n\n

In 1799, the Prime Minister of England, William Pitt the Younger<\/a> introduced the idea of income tax in order to finance English wars around the world. However, Pitt did not want to discourage colonial investment as a result of the wartime tax.<\/p>\n\n\n\n

As a solution, Pitt allowed income to remain untaxed in the colonies if it never made its way to England<\/a>. Manufacturers were still able to produce Caribbean sugar and Indian tea without having profits taxed.<\/p>\n\n\n\n

Today, the Non-Dom concept has evolved and its use progressed from its colonial past as many jurisdictions such as the UK, Malta, Ireland and Cyprus use it as an incentive to attract foreign nationals. Establishing the concepts of domicile and resident help determine how a foreigner will be taxed within the country.<\/p>\n\n\n\n

Income made in the country is taxed according to tax residency. However, income from abroad is usually taxed if an individual is both a domicile and a resident of the country, although the precise application of the Non-Dom concept as it relates to taxation varies by jurisdiction.<\/p>\n\n\n\n

Qualifying for a Tax Residency<\/h2>\n\n\n\n

183-day rule<\/em><\/strong><\/p>\n\n\n\n

An individual is deemed a Cyprus tax resident if they spend at least 183 days of the tax year in the country.<\/p>\n\n\n\n

60-day rule<\/em><\/strong><\/p>\n\n\n\n

As of 1st<\/sup> January 2017, the Cypriot Parliament introduced this as a secondary test for Cypriot tax residency. Under this, individuals may still qualify for a tax status if they spend less than 183 days on the island, provided that they:<\/p>\n\n\n\n