The exemption is from one tax, the special defence contribution, and it is not permanent. Two routes lead to being treated as domiciled, and one is a clock.
Non-dom is discussed as though it were a status that exempts a person from tax in Cyprus. It is narrower and more specific than that, and understanding which tax it touches is what makes the rest of the planning sensible.
One tax, not all of them
The special defence contribution is the Cyprus tax on dividends and interest. It used to reach rents as well, and no longer does: Law 245(I)/2025 deleted the rent provisions with effect from 1 January 2026, and there is now no charge on rental income anywhere in the consolidated text of Law 117(I)/2002. Rental income stays inside income tax. Since the 2015 amendment the contribution applies to individuals who are both resident and domiciled in Cyprus. An individual who is resident but not domiciled here is outside it, which is why dividends and interest are the headline of every article written about the regime.
What the status does not do is remove income tax, and it does not remove General Healthcare System contributions. Section 19(1)(ζ) of Law 89(I)/2001 charges 2.65 per cent on the income of a person who has income, and the definition of that income names dividends expressly, so the same dividend that escapes the defence contribution is still inside the healthcare one. There is a ceiling of 180,000 euros on the total that carries contributions, and the order in which earnings, pensions and income fill it decides how much of a dividend falls above the line. A plan built on the assumption that non-dom means nothing is payable is a plan that will be corrected by a first filing.
Two routes to being domiciled, and the second is a clock
Domicile for this purpose is taken from the Wills and Succession Law. An individual is treated as domiciled in Cyprus in either of two ways.
The first is a domicile of origin in Cyprus, which is a question about where the person's father was domiciled when they were born rather than about their own choices. That route carries exceptions, and the most important is for a person who has acquired and kept a domicile of choice abroad. Whether the exception applies is a question about the facts of a life, not about a form, and it is the reason a Cypriot by birth living abroad for decades should not assume the answer either way.
The second route has nothing to do with origin. An individual who has been tax resident in Cyprus for at least 17 of the 20 tax years before the year in question is treated as domiciled here, whatever their origin.
That second limb is why the regime is described as lasting seventeen years. It is not a concession that is withdrawn. It is a clock that was always running.
The consequence of the clock
A person arriving in their thirties and staying will reach the seventeen year mark in their fifties, at the point where investment income is often at its highest. That is knowable from the first year, and it is the sort of thing a plan should be built around rather than discovered.
It also means the value of the exemption is not the same for everyone, and since 1 January 2026 it is worth less than it was. For a person with substantial dividend income the difference over a decade is still real, but the gap it measures narrowed sharply, for the reason in the next section. For a person whose income is employment income it may be close to irrelevant, and the residency question matters for other reasons entirely.
The 2026 reform, and the exit it created for the person the clock catches
Nothing in the reform touched the non-dom. What it changed is the size of the drop at the end of the seventeen years, and it also created, for the first time, an alternative to taking that drop.
Dividends for the resident and domiciled fell from seventeen per cent to five. Section 3(1)(a) of Law 117(I)/2002, as it now stands after Law 245(I)/2025, charges every individual resident in the Republic at five per cent on the dividends they receive. Proviso (ii) to that paragraph keeps the old rate for a while: dividends received from a company resident in the Republic within six years of the amending Law's commencement, paid out of profits of tax years up to and including 2025, carry seventeen per cent. So the new rate is for the newer profits, and the old rate follows the old ones out.
Two other pieces of the same reform are worth knowing before planning around it. Section 3A(1) charges a resident individual ten per cent on a disguised distribution received from a company resident here in which they are a shareholder, and section 3A(2) measures that by the market value of company assets used privately by the shareholder or a connected person, and by the shortfall where an asset is transferred to them below market value. Deemed distribution, meanwhile, was wound down rather than abolished outright: it still reaches the accounting profits of 2024 and 2025, and not the profits of later years.
For the person the clock is about to catch there is now an election, and it is the sharpest new provision in the Law. Section 3D(1), inserted by Law 245(I)/2025, lets an individual who has no domicile of origin in the Republic and who is deemed to have acquired domicile here under the proviso to section 2(3), which is the seventeen-year rule, elect to pay a flat annual defence contribution of fifty thousand euro, whatever the level of their income, instead of the contribution on what they actually receive.
The terms are strict, and they are in the statute rather than in practice notes. Under section 3D(2) the election is irrevocable and binding and covers five consecutive tax years. Under section 3D(3) it takes effect only once the Commissioner accepts an application on a prescribed form, submitted by 30 June of the first year of the five. Under section 3D(4) the whole five years, two hundred and fifty thousand euro, is paid in a single instalment by the end of the month following the month the application was accepted, and its proviso is unforgiving: miss that deadline and the section does not apply for any of the five years, and the individual is charged on their income in the ordinary way. Under section 3D(5) the amount cannot be set off against other tax liabilities or credit balances; section 3D(6) confirms that paying it exhausts the defence contribution obligation for those five years; section 3D(7) refunds nothing, for any reason; section 3D(8) allows no credit for foreign tax against it; and section 3D(9) permits at most two such five-year periods.
The arithmetic is easy and it decides the question. Fifty thousand is what five per cent takes from a million euro of dividends, and what seventeen per cent takes from about two hundred and ninety four thousand. Below those levels the election costs more than the tax it replaces. Do the sum before the June deadline of the first year rather than after it, because the deadline is the whole of the opportunity.
If the seventeen years are a question for you, tell us the year you first became Cyprus tax resident and what income is in issue, at office@kleanthousplatis.com, or the enquiry form. We reply within one business day.
What this means in practice
- Establish which tax is actually in issue for the income in question before treating non-dom as the answer.
- Count the seventeen years from the beginning, and know the year in which the status ends.
- Where there is a Cyprus domicile of origin, the position turns on the domicile of choice exception and on the facts of the years abroad. It is not decided by a day count and it should not be assumed.
- Residency comes first. The exemption is only in point for a person who is Cyprus tax resident at all, under either the 183-day rule or the 60-day rule.
Whether the exemption is available on a particular set of facts, and for how long, is worked through on our tax residency and non-dom checker.
Questions we are asked
Which tax does non-dom status actually exempt you from?
One tax: the special defence contribution, which is the Cyprus tax on dividends and interest. It reached rents too until Law 245(I)/2025 deleted the rent provisions with effect from 1 January 2026. Since the 2015 amendment it applies to individuals who are both resident and domiciled in Cyprus, so an individual who is resident but not domiciled here falls outside it. The status does not remove income tax and it does not remove General Healthcare System contributions, each of which has its own rules and thresholds.
How long does non-dom status last in Cyprus?
Until the clock runs out. An individual who has been tax resident in Cyprus for at least seventeen of the twenty tax years before the year in question is treated as domiciled here whatever their origin, which is why the regime is described as a seventeen year one. It is not a concession that is withdrawn but a period that was running from the first year, and the year it ends is knowable from the beginning.
I was born in Cyprus but have lived abroad for decades. Am I domiciled here?
Not necessarily, and it should not be assumed either way. A domicile of origin in Cyprus is a question about where your father was domiciled when you were born rather than about your own choices, and the route carries exceptions, the most important being for a person who has acquired and kept a domicile of choice abroad. Whether that exception applies turns on the facts of a life rather than on a form or a day count.
Did the 2026 reform change what a non-dom pays?
No. Dividends and interest received by a resident who is not domiciled here were outside the defence contribution before the reform and are outside it after. What changed is what the person on the other side of the line pays. Section 3(1)(a) of Law 117(I)/2002 now charges a resident individual five per cent on dividends instead of seventeen, with proviso (ii) keeping seventeen per cent for six years on dividends out of profits of tax years up to and including 2025. So the exemption is worth what it always was; the drop at the end of the seventeen years is smaller.
Is there a way out once the seventeen years are up?
There is one, and it is new. Section 3D of Law 117(I)/2002, inserted by Law 245(I)/2025, lets an individual with no Cyprus domicile of origin who has become deemed domiciled under the seventeen-year rule elect to pay a flat fifty thousand euro a year of defence contribution whatever their income. The election is irrevocable, binds for five consecutive tax years, has to be accepted by the Commissioner on an application made by 30 June of the first year, and the entire two hundred and fifty thousand euro is paid in a single instalment by the end of the month after acceptance. Miss that payment and the section does not apply for any of the five years. Nothing is refunded, no foreign tax credit is allowed against it, and it may be used for at most two five-year periods.
Is non-dom worth planning around for everybody?
No, and the honest first question is what income is in issue. For a person with substantial dividend income the difference over a decade is significant; for a person whose income is employment income the exemption may be close to irrelevant, and residency then matters for entirely different reasons.
Do I need to be Cyprus tax resident before any of this applies?
Yes. Residency comes first, under either the 183 day rule or the 60 day rule, and the exemption is only in point for a person who is Cyprus tax resident at all. Establishing which tax is in issue, and then whether residency is established, comes before treating non-dom as the answer to anything.
Sources
- Special Contribution for the Defence Law of 2002, Law 117(I)/2002, consolidated text
- Special Contribution for the Defence of the Republic (Amending) (No. 4) Law of 2025, Law 245(I)/2025
This article is provided for general information purposes only and does not constitute legal advice.
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Klitos Platis
Advocate, Partner
Kleanthous & Platis LLC, Nicosia · Published 18 August 2026
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