The United Kingdom has officially confirmed the abolition of its Non-Domiciled (Non-Dom) regime effective April 6, 2025. This significant policy shift has prompted current UK Non-Doms to seek alternative jurisdictions that can accommodate their personal, business, and financial needs in a practical and efficient manner.
Several countries present themselves as viable alternatives to the British Non-Dom status:
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Italy: Italy offers a special tax regime for new residents, allowing them to pay a flat tax of €100,000 per year on their foreign income.
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Switzerland: Switzerland’s “forfait” system permits foreign residents to negotiate a lump-sum tax based on living expenses rather than income.
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Portugal: The Non-Habitual Resident (NHR) regime in Portugal provides significant tax benefits for the first ten years of residence, including exemptions on foreign income.
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Spain: Spain’s “Beckham Law” allows foreign workers to be taxed as non-residents for up to six years, benefiting from lower tax rates.
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Greece: Greece has introduced a regime similar to Italy’s, offering a flat tax of €100,000 per year on foreign income for new residents.
While these regimes offer substantial tax advantages and merit consideration, it is imperative to examine a sixth alternative: Cyprus.
Cyprus presents a remarkably attractive tax regime for foreign residents, particularly through its Non-Domiciled status. The key benefits include:
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Exemption from Tax on Dividends and Interest: Non-Doms in Cyprus are exempt from paying tax on dividends and interest income, whether sourced locally or abroad. Notably, there is no requirement for these funds to be remitted to a bank account in Cyprus.
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No Capital Gains Tax: Cyprus imposes no capital gains tax on profits from the sale of securities, such as shares, bonds, and ETFs.
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Absence of Wealth or Inheritance Tax: The country does not levy any wealth or inheritance taxes.
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50% Tax Exemption on High Income: Individuals earning over €100,000 annually benefit from a 50% tax exemption on employment income for ten years, a period soon to be extended to seventeen years.
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Low Corporate Tax Rate: With a corporate tax rate of 12.5%, Cyprus boasts one of the lowest rates within the European Union.
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No Remittance-Based Taxation: Unlike some jurisdictions, Cyprus does not tax funds remitted to the country.
These advantages render Cyprus an exceptionally appealing destination for high-net-worth individuals, retirees, and business owners aiming to optimize their tax positions.
Furthermore, acquiring Non-Dom status in Cyprus can be achieved with remarkable speed, courtesy of the 60-day rule, facilitating a swift transition. The legal system, rooted in English common law, provides a familiar and seamless operating environment.
One must also consider the plethora of additional advantages that Cyprus offers. The country’s robust infrastructure supports the establishment of substantial business operations with a comparative cost advantage over other prime EU jurisdictions. The business environment is notably friendly, underpinned by an attractive legal framework based on English common law principles.
Finally, the quality of life in Cyprus is not to be overlooked. The island’s pleasant Mediterranean climate, abundance of blue flag beaches, low crime rate, and modern infrastructure contribute to its allure. High-end housing options—whether in cities, along the coast, or in the mountains—are readily available. The presence of international schools, high-quality university education, advanced medical facilities, and a cosmopolitan lifestyle collectively strengthen Cyprus’s case as the optimal alternative to the UK’s Non-Dom status.
For those contemplating this transition, we at Royce Office Cyprus are prepared to assist. Our expertise includes facilitating the formation of Cyprus companies and advising on best practices to obtain Non-Dom status. We are committed to ensuring a seamless integration into Cyprus’s advantageous fiscal and legal landscape.