According to the Non-Domicile concept introduced in July 2015, an individual who lives more than 183 days annually in Cyprus and therefore is Tax-Resident in the Republic of Cyprus by virtue of the Income Tax Law and does not maintain his/her domicile in Cyprus is exempt from SDC tax (Special Defense Contribution).

The non-domiciled tax-residents individuals will be exempted from the following taxes whether the source of income is from within or outside Cyprus:

• SDC (Special Contribution for Defense) on dividends
• SCD on interest bank deposits
• SCD on rental incomes

The non-domicile concept applies to:
-an individual who does not have the domicile of origin in Cyprus, or
-an individual who was a Cyprus tax resident for less than 17 years out of the last 20 years before the relevant tax year.

The non-domicile concept does not apply to an individual who has for domicile of origin Cyprus by virtue of the Wills & Succession Law Cap 195 or is Cyprus tax resident under the Income Tax Law for at least 17 years out of the last 20 years preceding the relevant tax year irrespective of the individual’s domicile of origin, however, this does not apply in 2 cases:

(1) in the event the individual maintains a domicile of choice outside Cyprus as per the Wills & Succession Law Cap 195 and has not been a Cyprus Tax resident under the Income Tax Law for any period of 20 years preceding the relevant tax year, the domicile of choice implying the intention to acquire the domicile and making it his/her permanent home,

(2) in the event the individual has not been Tax-Resident in the Republic of Cyprus by virtue of the Income Tax Law for a period of at least 20 consecutive years before the new Non-Domicile concept came into effect on July 16th, 2015.