Two reliefs do most of the work in making Cyprus attractive to individuals relocating here. Neither was withdrawn by the 2026 reform, but the landscape around one of them has shifted. For the reform as a whole, see our overview of what changed.
Non-domiciled status
An individual who is tax resident in Cyprus but not domiciled here is exempt from Special Defence Contribution on dividends and interest, whether those arise in Cyprus or abroad. Broadly, you are non-domiciled if your domicile of origin is outside Cyprus and you have not been a Cyprus tax resident for at least 17 of the previous 20 years.
The General Healthcare System contribution still applies to that income at 2.65%, subject to the annual cap on income taken into account, so the position is an exemption from SDC rather than from all charges.
What the reform changed around it
Two changes narrow the practical value of non-dom status, without touching the regime itself:
- SDC on dividends fell from 17% to 5% for domiciled residents. The gap that non-dom status closes is therefore now five percentage points rather than seventeen.
- SDC on rental income was abolished for everyone. Non-dom status previously sheltered rental income too; that shelter is no longer needed because the charge no longer exists.
Non-dom status remains valuable, particularly for individuals with substantial dividend or interest income. It is simply no longer the dominant consideration it was when the alternative was a 17% charge.
The 50% exemption on employment income
This relief was not changed by the reform. An individual taking up first employment in Cyprus with annual remuneration above €55,000 may claim a 50% exemption on that employment income, for up to 17 years. The individual must not have been a Cyprus tax resident for at least 15 consecutive years before the employment begins.
The exemption follows the individual rather than the employer, so changing jobs within the period does not forfeit it.
How they interact with the new bands
With the tax-free threshold now at €22,000 and the top rate of 35% applying above €72,000, the 50% exemption is applied to employment income before the bands are worked through — which is what makes the combination effective at senior salary levels. Non-dom status then operates separately on dividend and interest income.
The two reliefs are independent and can be held at the same time. For an individual relocating to Cyprus to run a business they own, the combination of exempt employment income and dividends outside SDC is usually the point of the exercise.
This note is a general summary of Cyprus tax law as it stands in August 2026 and is not professional advice. Rates, thresholds and reliefs change, and how they apply depends on the facts of each case. Please contact us before acting on anything set out here.