The Special Contribution for the Defense of the Republic Law (SDC) imposes tax on certain categories of income such as interest, rents and dividends.
With the introduction of non-domicile or “non-dom” rules, a Cyprus tax resident individual who is not domiciled in Cyprus will effectively not be subject to SDC in Cyprus on any interest, rents or dividends (whether actual or deemed) regardless of whether such income is derived from sources within Cyprus and regardless of whether such income is remitted to a bank account or economically used in Cyprus. It is noted that no tax is imposed on individuals under the Income Tax Law in respect of interest and dividend income.
An individual is tax resident in Cyprus if he/she is physically present in Cyprus for a period or periods exceeding in aggregate 183 days during the calendar year. An individual who has not been a tax resident of Cyprus for a period of 20 consecutive years prior to the introduction of the law is considered a Cyprus non-dom.
We are very experienced in providing advice and compliance services to corporate executives and high-net-worth individuals who wish to undertake residence in Cyprus and benefit from the new rules. With smart planning, a qualifying non-dom individual that is resident in Cyprus for tax purposes will pay no tax on capital gains and most investment income.