How the exemption works
Cyprus taxes residents' passive income through the Special Defence Contribution (SDC) rather than income tax. Non-dom status is an exemption from SDC for residents whose domicile is outside Cyprus, and almost every UK leaver qualifies by default because their domicile of origin is the UK. The result: worldwide dividends sit outside both SDC and Cypriot income tax, leaving only the 2.65% GHS health levy, capped because it applies only to the first 180,000 euros of liable income each year. A worked example from our Cyprus non-dom guide: a non-dom drawing 200,000 euros of dividends pays roughly 4,770 euros in Cyprus, an effective rate under 2.5%. The status is claimed rather than won: you become resident via the 183-day or 60-day route, register with the Tax Department and declare your position, typically on the TD38 form.
How long it lasts, and what it does not cover
The benefit runs until you have been Cyprus tax resident for 17 of the last 20 years, at which point you are deemed domiciled and SDC switches on. The reform in force from 1 January 2026 kept the exemption and added a paid extension of up to two consecutive five-year periods at 250,000 euros each, taking the maximum window to 27 years. Be clear about scope: non-dom status removes SDC only. Salaries, business profits, pensions and rent are taxed under the normal Cypriot bands, and gains on Cypriot property stay within Cypriot capital gains tax.
The UK half decides whether any of this sticks
While you remain UK resident, the UK taxes your worldwide dividends regardless of what Cyprus charges, so the exemption only has value once you have broken UK residence under the Statutory Residence Test and, in the departure year, secured split-year treatment. The trap built for exactly this planning is temporary non-residence: return within five complete years and dividends paid from your own close company out of pre-departure profits are taxed in your year of return, so extraction at 2.65% only sticks if the move outlasts the window. Horizon handles the UK exit, dividend timing and departure-year return to a fixed fee agreed upfront, with non-resident returns £750 fixed; book a free clarity call at /book.