Tax Rules in Cyprus — Why Are Self Employed Individual Relocating There

Cyprus has silently become one of the most tax-efficient countries in Europe for self employed individuals. (The following article is based on tax rules as of the 2025/26 tax year, therefore figures and laws may change in future).

Personal Income Tax in Cyprus

In Cyprus, the 2025/26 tax year rules states personal income tax rate goes up to 35% if you earn over than €60,000 a year.

That may sound high but in the UK, as of the 2025/26 tax year, you pay 40% income tax on earnings between £50,270 - £125,140, and 45% on income over £125,140.

Non-Domicile

A non-domiciled person is someone who lives in a country for tax purposes but doesn’t consider it their permanent home. Those defined as “non domiciled” in Cyprus, will be exempt from the provisions of the Special Defence Contribution (SDC) Law. (SDC is a tax on dividends, interest and rental income in Cyprus)

In Cyprus, if you qualify as a non-domicile (2025/26 tax year), dividends and interest are all completely tax-free. That means you pay no tax on your investments and savings interest. However, Rental income is subject to income tax at the rate of 3%.

For example, on €30,000 rental income, as Non-Dom:

• Income tax: €900

• SDC: €0

• Total tax: €900

Effective tax rate on the €30,000k gross is 3% = €900🤯

Cyprus Corporation tax

The corporation tax in Cyprus is 12.5%.

UK Corporation tax

• Up to £50,000 profits → 19% small profits rate

• £50,000 - £250,000 - A marginal taper applies to a business with profits in this range.

• Over £250,000 profits → 25% main rate

Residency Rules

To qualify as a Cyprus tax resident, you generally need to spend at least 60 days per year in Cyprus, have a permanent home there, and not be a tax resident in any other country.

There’s also the 183-day rule, which is the standard across most countries — if you spend 183 days or more in one place, you’re automatically considered a tax resident there.

Summary

Overall for non domiciled individuals, Cyprus offers 12.5% corporation tax, 0% tax on dividends and interest, and excellent weather for the majority of the year.