In a significant policy shift, UK Chancellor of the Exchequer Rachel Reeves has announced the abolishment of the non-domicile (non-dom) tax regime, effective April 2025.

This move will impact high-net-worth individuals who have leveraged the non-dom status to limit UK tax on foreign income. As these individuals seek tax-friendly alternatives, Cyprus, with its favorable non-dom tax regime and strategic location, presents a compelling option for those considering a new financial base.

Consulco, our members in Cyprus, have prepared this legal update with practical guidance on the potential implications and alternatives, detailing specific tax benefits and conditions in Cyprus.

How Cyprus Could Benefit High-Net-Worth Individuals and Investors

As the UK moves to dismantle its non-dom regime, Cyprus is well-positioned to attract high-net-worth individuals and investors seeking tax-efficient alternatives. Cyprus has its own non-domiciled (non-dom) tax regime, offering a tax-friendly environment for Cyprus Tax Resident individuals who meet the criteria. The key benefits include:

1. No Tax on Dividend, Rental and Interest Income: Cyprus non-dom residents are exempt from any tax (more specifically Special Defence Contribution ‘SDC’ tax) on dividend, interest and rental income earned.
2. Capital Gains and Inheritance Tax Exemptions: Cyprus does not impose taxes on gains from the sale of securities or inheritance tax, making it particularly attractive for investors with substantial financial portfolios.
3. Tax-Free Dividends for 17 Years: Cyprus non-dom residents can enjoy dividend income tax-free for up to 17 years, a significant attraction for individuals and families planning a longer-term stay.
4. Low Corporate Tax Rate: With a corporate tax rate of just 12.5%, Cyprus has one of the lowest rates in the European Union, encouraging business owners and entrepreneurs to base their operations on the island. ‘Tech-companies’ and companies ‘financed by equity’ may be taxed as low as 2.5%
5. Strategic Location and Lifestyle Appeal: Cyprus, located at the crossroads of Europe, Asia, and Africa, offers not only a favourable tax regime but also a high-quality lifestyle with its Mediterranean climate, modern infrastructure, and high-quality healthcare and education systems.
6. Income Tax Exemptions: Foreign individuals that relocate to Cyprus and have salaried income by Cypriot entities, may be subject to 20% or 50% income tax exemptions, if they satisfy certain criteria.

Consulco’s expertise in Cypriot tax and legal matters can provide valuable guidance to those affected by the UK’s policy shift. We offer a full spectrum of services ensuring a smooth and effective transition.

Established in 1993 in Nicosia, Cyprus, our law firm is manifesting dynamic and steady growth in the provision of quality legal services in Cyprus to international business start-ups, mid- and large-size international companies, and individuals.

With the steady growth of our team from the manifold operation back in 1993 to a strong team of experienced professionals qualified in several jurisdictions, legal clerks, and high-tech office at a premium location in the centre of Nicosia, we are working towards recognition of our services at the international level.

Since 2011, we have been a member of Legal Netlink Alliance.