- June 8, 202612:19 pm
One of the measures introduced as part of the Tax Reform is the possibility to extent the Non-Dom regime for up to two consecutive periods of five years each. On 29 May 2026, the Cyprus Tax Department issued a tax circular in order to provide clarifications as to who is eligible for this extension as well as to how it will apply in practice.
The alternative regime in effect provides eligible individuals the option to elect for a fixed liability for Special Contribution for Defense (SCD). Eligible individuals are those who do not have a Cyprus domicile of origin and who will obtain a domicile of choice in Cyprus because they have been tax residents of the country for at least 17 out of the last 20 consecutive years.
The fixed liability involves a lump-sum payment of €250.000 covering a five-year period (equivalent to €50,000 per annum), instead of being subject to SCD on their actual dividend and interest income. The option is exercised through an application to the Tax Department, together with the provision of supporting documentation. The election applies for a five-year period commencing from the tax year in which eligible individuals become domiciled in Cyprus. Applications must be submitted by 30 June of that year. In case an eligible individual wishes to extend the application of the alternative regime for a second five-year period a separate application needs to be submitted, again by 30 June of the year in which the second term commences.
The lump-sum is payable by the end of the month following the month in which the application is approved by the Tax Department. It is not refundable and any foreign tax suffered can not be deducted from it.
Transitional provisions apply for individuals who became domiciled in Cyprus in 2024 or 2025, allowing them to opt into the alternative regime for the period 2026 – 2030, provided that their application is submitted by 30 June 2026. Eligible individuals may also submit their application up to two years in advance of the year in which they are expected to become domiciled in Cyprus.
The tax circular contains several examples in order to make the comprehension and application of the alternative regime as clear and smooth as possible.
For more information on the Cyprus Non-Dom regime you can refer to our related newsfeed. We are at your disposal for any queries as well as to assist with the application procedure.
