UK to Abolish Non-Dom Tax Regime: Could Cyprus be your next destination?
In a landmark announcement, the UK’s Chancellor of the Exchequer, Rachel Reeves, recently revealed the government’s decision to abolish the long-standing non-dom tax regime, effective from April 2025. This development will impact high-net-worth individuals who have long leveraged the non-dom status to avoid UK tax on foreign income while living in the UK.
How Cyprus Could Benefit you
As the UK moves to dismantle its non-dom regime, Cyprus is well-positioned to attract high-net-worth individuals and investors seeking tax-efficient alternatives. Cyprus has its own non-domiciled (non-dom) tax regime, offering a tax-friendly environment for Cyprus Tax Resident individuals who meet the criteria. The key benefits include:
- No Tax on Dividend, Rental and Interest Income: Cyprus non-dom residents are exempt from any tax (more specifically Special Defence Contribution ‘SDC’ tax) on dividend, interest and rental income earned.
- Capital Gains and Inheritance Tax Exemptions: Cyprus does not impose taxes on gains from the sale of securities or inheritance tax, making it particularly attractive for investors with substantial financial portfolios.
- Tax-Free Dividends for 17 Years: Cyprus non-dom residents can enjoy dividend income tax-free for up to 17 years, a significant attraction for individuals and families planning a longer-term stay.
- Low Corporate Tax Rate: With a corporate tax rate of just 12.5%, Cyprus has one of the lowest rates in the European Union, encouraging business owners and entrepreneurs to base their operations on the island. ‘Tech-companies’ and companies ‘financed by equity’ may be taxed as low as 2.5%
- Strategic Location and Lifestyle Appeal: Cyprus, located at the crossroads of Europe, Asia, and Africa, offers not only a favourable tax regime but also a high-quality lifestyle with its Mediterranean climate, modern infrastructure, and high-quality healthcare and education systems.
- Income Tax Exemptions: Foreign individuals that relocate to Cyprus and have salaried income by Cypriot entities, may be subject to 20% or 50% income tax exemptions, if they satisfy certain criteria.
Consulco’s expertise in Cypriot tax and legal matters can provide valuable guidance to those affected by the UK’s policy shift. We are here to offer a full spectrum of services ensuring a smooth and effective transition.
Let’s talk:
If you have any questions, please contact us directly at mikaella.psillidou@consulco.com