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If you’re considering moving to Cyprus, the country’s tax system is a big part of what makes it attractive to expats and international investors. Cyprus has long had a stable and business-friendly tax framework, but after more than two decades of minimal change, a new wave of tax reform is coming. Designed to modernise the system, promote fairness, and improve transparency, these changes will affect individuals seeking non-dom tax residency and those already enjoying the benefits.
This guide will take you through what’s changing, what it means for you, and how to make the most of your tax position in 2025 and beyond. We’ll also unpack how these reforms fit into the broader landscape of taxes in Cyprus, particularly for foreign nationals, retirees, remote workers, and digital nomads setting up their lives here.
Before we explore what’s new, let’s take a quick look at how Cyprus tax residency works today.
The standard rule is simple: if you spend more than 183 days in Cyprus during a calendar year, you’re considered a tax resident. This rule plays an important role in answering the popular question: is Cyprus tax free? Not exactly—but it does offer some generous benefits.
For those with more flexibility—or those frequently on the move—there’s an alternative: the 60-day rule. To qualify:
You must spend at least 60 days in Cyprus in one calendar year.
You must carry on a business in Cyprus or be employed/hold an office with a Cyprus tax resident company.
You must not reside more than 183 days in any other single country.
You must not be a tax resident in any other country.
You must own or rent a home in Cyprus.
This option remains one of the more unique approaches within cyprus tax rates for foreigners, making it a flexible and tax-efficient base.
Proof of eligibility involves submitting various documents to the Tax Department—think passports, lease agreements, utility bills, bank statements, and employment certifications. The goal is to verify that your ties to Cyprus are real, consistent, and legally compliant.
One of Cyprus’s most appealing tax incentives is the Non-Domicile (Non-Dom) status. This is especially valuable for high-net-worth individuals, retirees, and digital professionals relocating to Cyprus.
To be eligible, you must:
Not have a Cyprus domicile of origin (what you inherit at birth).
Not have acquired a domicile of choice in Cyprus (permanent residence with intent to stay indefinitely).
Not have been a Cyprus tax resident for at least 20 consecutive years prior to the tax year in question.
Not have been a tax resident in Cyprus for 20 years prior to 16 July 2015 (when the law was introduced).
Here’s what makes it so attractive:
Exemption from Special Defence Contribution (SDC) on dividends and interest earned in Cyprus or abroad for 17 years.
Ideal for individuals with global investments or passive income streams.
Easily combined with either the 183-day or 60-day tax residency rule.
These perks have turned Cyprus into a magnet for international businesspeople and professionals who want to optimise their global tax footprint while enjoying Mediterranean life. It’s part of why many ask, is Cyprus tax free? While taxes exist, the system is highly favourable—especially for non-doms.
Change is on the horizon, and it’s being driven by both internal goals and EU recommendations. The reforms, developed by the Economics Research Centre of the University of Cyprus, are currently under discussion and expected to be submitted to parliament soon.
Here’s a breakdown of what’s coming:
The 183-day rule will remain unchanged.
The 60-day rule will be strengthened, possibly with additional documentation requirements.
A new tax residency test may be introduced to capture individuals whose centre of business interests is in Cyprus, even if they don’t meet the 60- or 183-day physical presence thresholds. This mirrors systems in countries like France.
Dual tax residency situations will be resolved based on double tax treaties.
This means that even if you’re not living in Cyprus full-time, if your core business is based here, Cyprus may still consider you a tax resident.
The SDC on rental income may be abolished entirely—great news for property investors.
The SDC on dividends might drop from 17% to 5% for residents who are also domiciled in Cyprus.
The Non-Dom SDC exemption is expected to stay the same.
A small annual fee may be introduced to extend Non-Dom benefits beyond the 17-year period.
These changes further differentiate Cyprus from other EU jurisdictions and align with ongoing improvements to corporate tax Cyprus initiatives as well.
These changes aim to make the system fairer and more inclusive:
The tax-free threshold is expected to rise from €19,500 to €20,500.
The top income tax rate of 35% will now apply to incomes over €80,000 instead of €60,000.
Family-focused tax credits are coming:
€1,000 per child or student.
€1,500 for first-home residential loans.
€1,000 annually for home energy upgrades (up to 5 years).
These updates are designed to complement the existing advantages offered under cyprus tax rates for foreigners and solidify the country’s reputation for progressive tax policy.
If you’re already in Cyprus or planning on moving to Cyprus, these changes may impact how you structure your finances, investments, and residency plans.
Your tax-exempt status on dividends and interest will continue for up to 17 years.
You may face a nominal annual charge to maintain Non-Dom status after reforms are passed.
Now might be the ideal time to establish residency before the rules tighten.
With a potential new test based on business presence, your eligibility might improve if you operate a Cyprus-based company—even without long stays.
The 60-day rule remains viable, but documentation requirements could increase.
A strong business or property tie to Cyprus will likely help bolster your application.
All of this strengthens Cyprus’s appeal as a strategic jurisdiction with attractive corporate tax Cyprus structures and competitive personal income rates.
Consult a Cyprus tax advisor now to understand how the changes could affect you.
Ensure your paperwork is airtight—title deeds, lease agreements, utility bills, and business registrations are all key.
If you’re on the fence about moving to Cyprus, now’s the time to act before the reforms are enacted.
Cyprus remains a top destination for tax-savvy individuals, entrepreneurs, and remote workers. With its Mediterranean lifestyle, EU access, and progressive tax advantages, it’s easy to see why. While the upcoming reforms will tweak the rules, they won’t remove the core benefits that make taxes in Cyprus so appealing—especially under the Non-Dom scheme.
Whether you’re already a resident or planning your move, staying informed and proactive will ensure you continue to benefit from one of Europe’s most attractive tax environments. And no—Cyprus isn’t tax free, but with its low cyprus tax rates for foreigners, flexible options, and friendly corporate tax Cyprus incentives, it comes pretty close for many.
1. Will the Non-Dom tax exemption still apply to interest and dividends?
Yes, the exemption is expected to remain in place for up to 17 years from registration.
2. Is the 60-day tax residency rule being eliminated?
No, it’s being enhanced and may require more detailed documentation to qualify.
3. Can I still become a tax resident if I don’t live in Cyprus full-time?
Yes—especially if Cyprus becomes the centre of your business interests under the proposed new residency test.
4. Will I pay more tax on income over €60,000?
Not necessarily. The 35% rate will now apply only to income above €80,000.
5. Are there new tax benefits for families and property owners?
Yes—expect allowances for children, students, first-home loans, and home energy improvements.
If you’re buying in Cyprus and want to make the most of the 5% VAT rule, now is the time to act. Get in touch with a property law expert, gather your paperwork early, and make your move with confidence. If you’re moving to Cyprus, understanding taxes in Cyprus is your first smart step.
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