VAT and Non-Dom Status in Cyprus

What is non-dom status in Cyprus?

Non-domiciled status — non-dom — is a personal tax status available to individuals who have become Cyprus tax residents but were not domiciled in Cyprus for tax purposes. Non-dom status exempts qualifying individuals from Special Defence Contribution on foreign dividends and foreign interest for up to 17 years. It is a personal income tax benefit — it applies to you as an individual, not to your Cyprus company. Non-dom status has no direct effect on the VAT obligations of your business.

How VAT and non-dom status interact

Non-dom status and business VAT are completely separate systems. Your non-dom status determines your personal tax on investment income. Your business VAT registration is determined by what your business does and whether its taxable turnover exceeds €15,600. Having non-dom status does not exempt your business from VAT registration, does not change your quarterly filing obligations and does not affect the VAT rates that apply to your supplies. The two systems simply operate independently.

The SDC saving from non-dom status

The SDC rate on dividends in Cyprus from 2026 is 5%. Non-dom individuals pay zero SDC on foreign dividends for up to 17 years. On €100,000 of annual dividend income from your Cyprus company — where those dividends are sourced from foreign profits — the SDC saving is €5,000 per year. Over the full 17-year non-dom period that is a potential saving of €85,000. For founders with higher dividend income the saving scales proportionally. For the full non-dom application process and advice on structuring visit tax.com.cy.

VAT obligations that still apply regardless of non-dom status

• VAT registration when business taxable turnover exceeds €15,600
• Quarterly VAT return filing via Taxisnet
• Charging 19% VAT on standard-rated supplies to customers
• Paying net VAT due to the Cyprus Tax Department by quarterly deadlines
• Issuing valid VAT invoices with your VAT number on every taxable supply
• Maintaining VAT records for 6 years
• Applying reverse charge on services received from non-Cyprus suppliers

Non-dom status for incoming founders and executives

Many founders and senior executives move to Cyprus specifically to access the Cyprus non-dom regime. The application can be made after establishing Cyprus tax residency — either by spending more than 183 days in Cyprus per calendar year or via the 60-day rule for individuals not resident elsewhere. Once non-dom status is established the benefits are substantial. But the business VAT setup needs to happen in parallel with or before the non-dom application — do not delay business registrations while waiting for non-dom confirmation.