Beyond the Non Dom Regime: Relocating from the United Kingdom to Cyprus

Until April 2025, a foreign business person resident in the UK could keep overseas income and gains outside UK tax by leaving them offshore, while a foreign domicile kept a worldwide estate outside the scope of UK inheritance tax. Both protections have been withdrawn. Residence is now the sole test. After four years, worldwide income and gains are taxed as they arise. After ten years, the individual's entire worldwide estate falls within UK inheritance tax at 40%.

The difference in outcome is considerable. On £1 million of foreign dividends, a UK additional rate taxpayer now pays approximately £393,000 in income tax. A non domiciled resident of Cyprus pays no Cyprus tax on the same income, and may continue to benefit from that exemption for up to 27 years.

This article outlines the UK changes, the Cyprus regime, the matters to be addressed before departure and the support Andreas Georghadjis LLC provides throughout the relocation, from residence permits to the acquisition of a home.

The remittance basis was abolished on 6 April 2025 and, with it, the relevance of domicile for both income tax and inheritance tax. The decisive factor is now the length of UK residence.

Foreign income and gains.Relief survives only for new arrivals who have spent the previous ten tax years outside the UK, and only for their first four years. Everyone else pays UK tax on worldwide income and gains as they arise, whether or not the funds are brought to the UK.

Temporary repatriation facility.Former remittance basis users may bring pre April 2025 foreign income and gains into the UK at 12% in 2025/26 and 2026/27, and at 15% in 2027/28. After that, the facility closes for good.

Inheritance tax.A person who has been UK resident for at least ten of the previous twenty tax years is now a long term resident, and the whole worldwide estate is within UK inheritance tax at 40%. Trusts settled by long term residents have lost most of their former protection.

The inheritance tax tail.Departure does not end the exposure immediately. A former long term resident remains within UK inheritance tax on worldwide assets for between three and ten years after leaving, depending on how long the person lived in the UK. After twenty years in the UK, the tail runs for the full ten years. Timing is therefore critical, and planning should begin well before departure.

Further changes expected.The position is expected to deteriorate further with the next UK Budget. Given the continuing pressure on the public finances, further measures affecting wealthy and internationally mobile individuals are anticipated. Those who defer their planning until after the announcement may find their options narrower and the cost of departure higher.

Several jurisdictions are competing to attract individuals leaving the UK. Cyprus is distinctive in combining a highly favourable personal tax regime with the advantages of full membership of the European Union.

A non domiciled resident pays no Cyprus tax on dividends or interest, wherever arising, for up to 27 years, with no remittance basis and no annual charge. Cyprus imposes no inheritance tax, gift tax or wealth tax, and tax residence may be established with as few as 60 days of presence in a year.

Beyond tax, Cyprus offers the stability and legal certainty of a European Union member state. Its legal system is founded on English common law, so that its contract law, procedure and legal concepts will be familiar to those accustomed to the UK, and English is widely used in business. Cyprus is around four and a half hours from London by direct flight and two hours ahead of UK time. It also offers a Mediterranean climate, an established international community and a choice of international schools.

Tax residence in Cyprus is determined by statutory tests rather than by election. An individual who satisfies either test in a calendar year is resident for that year.

The 183 day rule.More than 183 days in Cyprus in the calendar year.

The 60 day rule.Intended for individuals whose time is divided between several countries, this test requires all four of the following conditions to be met in the same calendar year:

• at least 60 days in Cyprus;
• no more than 183 days in any other single country;
• a business, an employment or a directorship of a Cyprus tax resident company, held at some point in the year and not ended by the year end; and
• a permanent home in Cyprus, owned or rented.

The 2026 reform removed the former additional condition that the person must not be tax resident anywhere else. Where the UK and Cyprus both treat a person as resident, the tie breaker in the double tax treaty decides.

The non domiciled regime is the central feature of the Cyprus offering. Dividends and interest received by individuals are taxed not under the Income Tax Law but under the Special Contribution for the Defence Law, and a resident who is not domiciled in Cyprus is exempt from that contribution in full.

In practice, a non domiciled resident pays no Cyprus tax on dividends or interest, irrespective of their source and of whether the funds are remitted to Cyprus. There is no remittance condition and no annual charge.

Who qualifies.Anyone whose domicile of origin is outside Cyprus, from the first year of residence. The status must be applied for and confirmed by the Tax Department. It is not automatic.

How long it lasts.Seventeen years. A person who has been resident for 17 of the previous 20 years becomes domiciled in Cyprus for this purpose, and keeps that domicile unless non resident for 20 consecutive years.

The 2026 extension.On reaching the 17 year limit, a person whose eligibility rests on a foreign domicile of origin may extend the exemption for two further periods of five years each, against an upfront payment of €250,000 per period. The regime can therefore run for 27 years.

What else changed in 2026.The defence contribution on rental income was abolished for everyone. For Cyprus domiciled residents, the rate on dividends fell from 17% to 5% for profits earned from 2026. Non domiciled residents remain fully exempt.

Income tax.Progressive, with the first €22,000 free of tax and a top rate of 35% above €72,000.

Relief for new employees.A person who takes up first employment in Cyprus after 15 consecutive years without Cyprus residence or Cyprus employment, with remuneration above €55,000, may exempt half of that income from tax for 17 years. A smaller relief of 20% of remuneration, capped at €8,550 a year for seven years, applies in some cases where the 50% relief does not. The two cannot be combined.

Capital gains.Capital gains tax at 20% applies only to immovable property in Cyprus and to shares in companies that derive at least 20% of their value from such property. Since 2026, the exemption for shares in such companies is confined to shares listed on a regulated market. Gains on all other shares and securities are outside tax.

No inheritance, gift or wealth tax.Cyprus has none. An estate can pass to the next generation without a Cyprus tax charge.

Foreign pensions.A resident may elect each year to pay a flat 5% on foreign employment pensions above €5,000 instead of the ordinary rates.

Stamp duty.Abolished from 1 January 2026.

Companies.Corporate income tax is 15%. The deemed distribution rules were abolished for profits earned from 2026.

Cyprus has double tax treaties with more than 65 countries. They include the United Kingdom, the United States, Canada, Switzerland, the United Arab Emirates, Saudi Arabia, Qatar, India, China and Singapore, together with almost every member state of the European Union. The network is still growing, with new treaties recently signed with Oman, Vietnam, Curaçao and Hong Kong.

For families with international investments, the treaty network is of practical importance in four respects.

• Reduced withholding tax.A Cyprus resident can usually claim reduced rates of foreign withholding tax on dividends, interest and royalties. For a non domiciled resident who pays no Cyprus tax on that income, the foreign withholding is often the only tax left, and its reduction is therefore of direct value.
• Relief from double taxation.The treaties decide which country has the right to tax each type of income and give credit for tax paid in the other country. Where no treaty applies, Cyprus law still gives a credit for foreign tax, up to the Cyprus tax on the same income.
• Dual residence.Where two countries both claim a person as resident, the treaty tie breaker settles the question.
• No Cyprus withholding tax.Cyprus levies no withholding tax on dividends, interest or royalties paid to non residents, save for limited exceptions aimed at payments to low tax jurisdictions.

To use the treaties, a person needs a Cyprus tax residence certificate, which the Tax Department issues once residence is established.

The Cyprus benefits are available only once UK residence has ended. A departure that is inadequately planned or documented may give rise to UK liabilities that outweigh the advantages of the move. Four matters require particular attention.

• The statutory residence test.Days in the UK and ties such as a home, family and work decide residence. The move should be timed so that the year of departure qualifies for split year treatment and the following years are clearly non resident.
• Temporary non residence.A person who returns to the UK within five years may be taxed on certain gains and income realised while away. Disposals and large distributions planned for the period abroad should take this into account.
• The inheritance tax tail.Moving to Cyprus does not shorten it. Estate planning, life cover and a review of existing trusts belong in the relocation plan from the outset.
• The double tax treaty.The 2018 treaty decides which country taxes which income and resolves dual residence. UK source income, such as rent from UK property, generally remains taxable in the UK.

Tax residence and the legal right to live in Cyprus are two separate questions. The immigration route depends on nationality.

EU, EEA and Swiss citizensmay move freely. Those staying more than three months apply to the Migration Department for a registration certificate within four months of arrival.

Other nationalshave three main routes.

• Permanent residence by investmentunder Regulation 6(2) of the Aliens and Immigration Regulations. It requires at least €300,000, excluding VAT, in one of four categories: new residential property from a developer, other real estate, the share capital of a Cyprus company with a physical presence and staff in Cyprus, or units in a Cyprus collective investment undertaking. The applicant must also show secured annual income of at least €50,000, plus €15,000 for a spouse and €10,000 for each dependent child. For the residential property route, that income must come from outside Cyprus. The permit covers the spouse and minor children, lasts for life and requires only one visit to Cyprus every two years.
• A foreign interest company.A company registered with the Business Facilitation Unit, whose foreign shareholders have invested at least €200,000 in Cyprus and which pays its third country staff at least €2,500 gross a month, can obtain residence and employment permits for its owners and key staff. This route fits the 60 day rule, since a Cyprus employment or directorship is one of its conditions.
• Naturalisationafter long lawful residence, which brings Cyprus citizenship and the right to live and work anywhere in the European Union.

A relocation of this nature involves immigration, property, tax, corporate and succession matters, often in two jurisdictions at once. Andreas Georghadjis LLC advises on every Cyprus aspect of the move, from initial planning to completion, and works closely with the client's UK advisers on the departure.

• Planning the move.Reviewing the family's assets, income and ties, identifying which Cyprus residence test fits, and timing the move with the UK advisers so the year of departure works on both sides.
• Immigration.Choosing the right route, preparing and filing the applications for permanent residence, foreign interest company permits or EU registration certificates for the whole family, and dealing with the Migration Department until the permits are issued.
• Property acquisition and leasing.Assisting clients in identifying a suitable property to purchase or lease, negotiating terms, and carrying out full legal due diligence on title, encumbrances, planning and building permits and the developer's position. The firm drafts or reviews the contract, deposits it at the Land Registry to protect the buyer, oversees the payments and completes the transfer of title. For tenants, the firm reviews and negotiates the lease.
• Tax registration and non dom status.Registering with the Tax Department, applying for non domiciled status, and obtaining the Cyprus tax residence certificate the client will need to show the UK and other countries.
• Business and investment structures.Setting up Cyprus companies, holding structures and directorships, including those that satisfy the 60 day rule or support a foreign interest company permit.
• Banking.Introductions to Cyprus banks and support through the account opening process.
• Estate planning.Wills and succession planning under Cyprus law, coordinated with the planning needed for the UK inheritance tax tail.
• Ongoing advice.Continuing advice as circumstances change, including on whether to extend the non dom exemption when the 17 year limit approaches.

Clients have a single point of contact throughout, from the initial consultation until they are settled in their new home.

The abolition of the UK non dom regime has removed the principal reason many foreign families chose the UK as their base, and further changes are expected. Cyprus offers an exemption from tax on worldwide dividends and interest for up to 27 years, no inheritance or wealth tax, a flexible residence test, membership of the European Union and a high quality of life.

These advantages are substantial, but they depend on a properly planned and documented departure from the UK, appropriate management of the UK inheritance tax tail and the correct immigration route. Early advice is essential.

For further information, please first contact us through this website or at info@lloydslaw.com, or at Andreas Georghadjis LLC, 3rd Floor, Iris House, John Kennedy Street, 3106 Limassol, Cyprus, telephone +357 25 590 600.

This article is for general information only and does not constitute legal or tax advice. Specific advice should be obtained on the facts of each case, including from UK advisers on the UK aspects.