New Tax Landscape for Non-UK Domiciled Individuals
On October 30, 2024, the UK government officially confirmed that its non-domicile (“non-dom”) regime will be abolished effective April 6, 2025. This regime has long been a preferred option, particularly for high-net-worth individuals (“HNWIs”), who are likely to face significant changes to their tax obligations, prompting many to consider relocating to more tax-friendly jurisdictions.
Cyprus: A Compelling Alternative for HNWIs
Cyprus, with its favorable non-dom tax scheme, is an attractive option for individuals seeking a tax-efficient jurisdiction.
To establish tax residency in Cyprus, individuals can either reside in Cyprus for 183 days in a tax year or meet the “60-day rule”.
Under the “60-day rule”, one must spend a minimum of 60 days in Cyprus, maintain a residence, and have professional or business ties within Cyprus, amongst others. This scheme is designed to provide immediate tax relief for individuals who make Cyprus their primary residence without requiring long-term commitments.
Foreigners who become Cyprus tax resident and non-dom (subject to VISA requirements for non-EU citizens) benefit from a well-rounded combination of tax and non-tax benefits both at the personal and corporate level, as outlined below:
(a) Tax Benefits
- Exemption from tax on dividend income and interest income
- Exemption from tax on gains from selling securities/titles
- No inheritance, gift, estate, or capital gains tax (except on Cyprus immovable property)
- The first Euro 19,500 of emoluments is tax-free for all employees
- 50% tax exemption for employees whose remuneration exceeds Euro 55,000 per annum for a period of 17 years
- 20% tax exemption for employees whose remuneration is below Euro 55,000 (or up to Euro 8,550) for a period of 7 years, subject to conditions
- Special tax rate of 8% on income generated by asset managers
- Favorable IP regime, allowing Cyprus IP companies to achieve an effective tax rate of up to 2.5% on qualifying profits from IP exploitation
(b) Non-Tax Benefits
- High quality of life in a low-crime society with a welcoming culture
- Prime geographical location with a pleasant Mediterranean climate
- Advanced healthcare and educational facilities
- Cost-effective and straightforward establishment and maintenance of legal entities
Cyprus stands out as an ideal destination for individuals looking to safeguard their wealth and optimize their tax planning. At Nobel, we are committed to working closely with our clients to guide them through new regulations and provide personalized solutions tailored to their unique needs. Our dedicated team of professionals is ready to assist you in examining the implications of these upcoming changes, as well as to recommend potential relocation and investment options. Contact us here for more information.
