Tax Rates in Cyprus
for Expats 2026

Non-Dom 60-Day Rule — Cyprus's Signature Tax Advantage

Cyprus's Non-Dom regime is simpler and more accessible than Malta's 183-day rule. Here's how it works: if you spend 60 or more days in Cyprus in a tax year AND you are not resident in any other single country for more than 183 days, you qualify as a Non-Dom resident. The benefit is extraordinary: as a Non-Dom, you are exempt from the Special Defence Contribution (SDC)—meaning dividends from foreign companies, interest income from abroad, and rental income are all taxed at 0% in Cyprus. No SDC, no withholding in most treaty networks.

This is game-changing for digital nomads, remote investors, and entrepreneurs. A Non-Dom holding company structure can legally receive foreign dividends completely free of Cyprus taxation. Duration: the Non-Dom status applies for the first 17 consecutive years of Cyprus tax residency—after that, you become a regular Dom resident and pay SDC on investment income.

Income Tax Brackets

Cyprus uses a progressive income tax system on Cyprus-sourced income. Residents are taxed on worldwide income, but Non-Doms are exempt from SDC on foreign investment income (dividends, interest, rental). Self-employed individuals and entrepreneurs benefit from generous deductions including professional expenses, equipment depreciation, and training costs.

Note: Non-Dom residents on foreign-sourced dividends, interest, and rental income pay 0% SDC regardless of bracket. This exemption is the core reason Cyprus attracts investors.

Corporate Tax at 12.5% + Notional Interest Deduction (NID)

Cyprus's 12.5% headline corporate tax rate is already one of the lowest in the EU. But the Notional Interest Deduction (NID) rule makes it even more powerful. NID allows a company to deduct a deemed interest expense on the company's equity, calculated on the value of net equity. For equity-financed companies, this can reduce the effective corporate tax to 2–3%, sometimes lower.

Example: A Cypriot holding company with €1 million in equity and 4% notional interest rate can deduct €40,000 in "interest," reducing taxable income. When combined with the 12.5% corporate rate, the effective tax on income is minimal. Add the Non-Dom exemption from SDC on dividends received from foreign subsidiaries, and you have one of the world's most efficient tax-transparent holding company jurisdictions—entirely inside the EU.

VAT & Consumption Taxes

The standard VAT rate in Cyprus is 19%. Reduced rates apply to hospitality (9%) and essential goods like food, medicine, and books (5%). Most services are standard-rated. Small businesses under a certain threshold may be exempt from VAT registration, simplifying compliance for freelancers and small traders.

Capital Gains & Investment Income

Capital gains on the sale of immovable property (real estate) are taxed at 20% in Cyprus. However, capital gains on the sale of securities and shares are completely exempt—no capital gains tax. For corporate disposals, there is generally no corporate-level CGT on trading stock, making Cyprus extremely attractive for trading companies and investment vehicles.

The Intellectual Property Box regime offers a 2.5% effective tax rate on qualifying IP income (patents, copyrights, software), using a favourable "nexus approach" that allows cost adjustments. Crypto is not specifically taxed; frequent traders may be classified as running a business (corporation) and pay corporate tax; occasional traders may qualify for securities exemption on gains.

Social Security

Employee social insurance contributions are 8.8% of gross salary, capped at a maximum annual contribution. Employers contribute a matching 8.8%. These contributions fund pensions, healthcare, and unemployment benefits. For self-employed individuals and freelancers, the rate is approximately 14–16%, depending on income. Cyprus has bilateral social security agreements with many countries, reducing or eliminating double contributions for expats.