Relocating investor: a materially lower lawful tax bill via non-dom
Background
The client is a private investor who relocated to Cyprus and lives mainly on dividend and interest income from an international portfolio. They had already moved and filed once, but through a general adviser who had not structured the residency position or registered them as non-domiciled — so reliefs that Cyprus specifically offers internationally mobile individuals were being left on the table.
The challenge
Living on passive income, the client should have been one of the clearest beneficiaries of the Cyprus non-dom regime — yet they were paying Special Defence Contribution (SDC) on dividends and interest that a non-dom does not pay at all, and the residency position was undocumented, leaving it open to challenge. There was no record establishing residency under the 60-day rule, no non-dom registration, and no plan for how investment income flowed in. The result was an annual tax bill materially higher than the law requires, built on a fragile, undocumented basis.
What we did
- Established Cyprus tax residency cleanly under the 60-day rule, with a documented permanent home and a qualifying Cyprus tie
- Confirmed and registered non-domiciled status, removing SDC on dividends and interest entirely (0%)
- Mapped the portfolio income so distributions and interest were received efficiently as a Cyprus non-dom
- Quantified the only remaining Cyprus charge — the 2.65% GHS contribution, capped at about €4,770 a year
- Put the day-count and tie documentation in place to support the residency position if ever queried
- Set a simple annual compliance routine so the position stays current and defensible
The outcome
On the client's income profile, the combination of non-dom status and a correctly documented 60-day residency saved an estimated €14,000 a year, fully within the law. SDC on dividends and interest dropped to zero, leaving only the capped GHS contribution as a Cyprus cost on that income. Beyond the cash saving, the bigger change was robustness: the position is now documented and defensible rather than fragile, so it would withstand scrutiny. The client also has clarity for the years ahead — including the option, since 2026, to extend non-dom benefits beyond the standard 17 years for a lump sum if they remain long term.
Key takeaways
- A non-dom Cyprus resident pays 0% SDC on dividends and interest — for someone living on passive income that is the single biggest lever.
- Residency and domicile are separate tests: you must document residency (183-day or 60-day) and register non-dom status; assuming either is how reliefs get missed.
- The only Cyprus charge left on a non-dom's dividends is GHS at 2.65%, capped at about €4,770 a year.
- A documented day-count and tie file turns a fragile position into a defensible one.
Services used
Related guides
Frequently asked questions
No income tax and 0% SDC — only the GHS health contribution at 2.65%, which is capped at €180,000 of income (about €4,770 a year). For an investor living on dividends, that capped GHS is usually the only Cyprus tax on that income.
You can be Cyprus tax resident by spending at least 60 days in Cyprus in a year, provided you are not tax resident elsewhere, spend no more than 183 days in any other single country, and keep a Cyprus home plus a business, employment or directorship here.
Up to 17 of the last 20 years of Cyprus residence. Since the 2026 reform it can be extended by two further five-year periods for a lump sum of €250,000 each, to a maximum of 27 years.
No — the figure here is illustrative for one income profile. The actual saving depends on the size and mix of your income. We model your specific position before advising.
Anonymised illustration of a typical engagement and outcome, not a named client.
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