What this covers
If you are tax resident in Cyprus but not domiciled there, you are outside the scope of the Special Defence Contribution. In practice that means dividends and interest are not taxed, which is the reason most people look at Cyprus in the first place.
This guide sets out who qualifies, what the exemption actually covers, how long it runs, and what you still pay.
The two tests
Non-dom status requires both of the following. Failing either means you do not qualify.
1. You are Cyprus tax resident. Either by spending more than 183 days in Cyprus in the tax year, or under the 60-day rule.
2. You are not domiciled in Cyprus. Domicile is not the same as residence. You are treated as non-domiciled if:
- you do not have a domicile of origin in Cyprus, which is generally acquired at birth and follows your father’s domicile, and
- you have not acquired a domicile of choice in Cyprus by settling there with the intention of remaining permanently, and
- you have not been Cyprus tax resident for at least 17 of the 20 tax years immediately preceding the year in question.
Form T.D.38 puts the test as being “a tax resident of Cyprus for less than 17 of the last 20 years prior to the current tax year”. Read on its own that looks like a purely rolling test, and until 2025 it worked that way. It no longer does, and the form predates the change.
Under the 2025 amendment, deemed domicile is not shed simply by falling back below 17 years in a rolling 20 year window. Once acquired, it is retained until twenty years of non-residence, which need not be consecutive. The Tax Department’s own example has someone who was resident for only 16 of the last 20 years still treated as domiciled. The practical effect is that deemed domicile is much harder to lose than the form’s wording suggests.
There is one further route. Someone who has a domicile of origin in Cyprus can still qualify if they maintain a domicile of choice elsewhere and were non-resident in Cyprus for at least 20 consecutive years. Form T.D.38 covers this case explicitly.
What the exemption covers
Non-domiciled residents are outside the scope of SDC entirely. That covers:
- Dividends, whether from a Cyprus company or a foreign one
- Interest
- Rental income is partly affected, though rental income remains subject to income tax in the normal way
Source does not matter. A dividend from a German or UAE company is treated the same as one from a Cyprus company.
What you still pay
Non-dom status is not a zero-tax position, and describing it that way is where most misunderstandings start.
General Healthcare System contribution. All Cyprus tax residents, non-doms included, pay the GHS contribution on dividend and interest income. It is charged at 2.65% on income up to an annual cap of €180,000 across all GHS-liable income combined, giving a maximum of €4,770 a year.
Income tax on everything else. Salary, self-employment income, pensions and rental income are taxed normally. Non-dom status touches SDC, not income tax.
Corporation tax. If your income arrives through a Cyprus company, that company pays corporation tax on its profits before any dividend reaches you.
Worked example
Someone tax resident in Cyprus, not domiciled there, receiving €200,000 of dividends from a foreign company and no other income.
- Special Defence Contribution: €0, because they are outside its scope
- Income tax on dividends: €0, dividends are not subject to income tax
- GHS contribution: 2.65% on income capped at €180,000, so €4,770
The cap applies across all GHS-liable income combined, so a person with other income of that kind would not pay 2.65% twice on the same capped amount.
How long it lasts
The 17 of 20 year test means the exemption is not permanent. Once you have been Cyprus tax resident for 17 of the preceding 20 tax years, you are treated as domiciled in Cyprus and SDC applies.
There is now a way to extend it. Article 3D of the SDC Law, governed by Circular 02/2026, allows an individual to elect an alternative method of imposing SDC for a five year period. The relevant figures, taken from the Tax Department’s own application form:
| Item | Detail |
|---|---|
| Payment | €250,000 for the whole five year period |
| Deadline to apply | 30 June of the first year of the period |
| Early application | Permitted up to 2 years before you would be treated as domiciled |
| Payment due | End of the month following approval by the Commissioner of Taxation |
| How to submit | Completed, printed, signed, scanned, and sent through the Tax For All (TFA) portal |
If the liability is not settled by the deadline, the application is written off.
What commonly goes wrong
Confusing domicile with residence. They are separate tests under separate rules. You can be resident without being domiciled, which is the entire point, and you can be domiciled in Cyprus while living elsewhere.
Assuming it means zero tax. The GHS contribution still applies, and everything outside SDC is taxed normally.
Assuming deemed domicile lapses once you drop below 17 years. It does not. After the 2025 amendment it is retained until twenty years of non-residence, which need not be consecutive, so dipping below the 17 year count in a rolling window does not on its own restore the exemption.
Missing the 30 June deadline for the extension. The application must be in by 30 June of the first year of the five year period it covers.
Treating a domicile of origin as fixed. A domicile of choice can be acquired in Cyprus by settling there permanently, and that can end the exemption regardless of the 17 year count.
Where to check
Domicile is a legal question that turns on your particular circumstances, including where your father was domiciled and what your intentions are. It is not something to settle from a web page.
The Tax Department publishes the forms that decide this: Form T.D.38 for the declaration itself, and questionnaires T.D.38Qa and T.D.38Qb for establishing domicile of origin and domicile of choice. Circular 02/2026 governs the extension.
Have your position confirmed by a firm licensed to advise in Cyprus before making decisions that depend on it.
