Cyprus Non-Dom + IP Box: keep more of your IP profit
Pairing the Cyprus IP Box with Non-Domiciled tax residency can take the end-to-end rate — from company profit to money in your pocket — as low as ~5%. The company pays ~3% on qualifying IP profit; a Non-Dom shareholder then receives dividends at 0% Special Defence Contribution.
From company profit to your pocket
Two layers combine: a low corporate rate on IP profit, then near-zero personal tax on the dividends.
| Company: qualifying IP profit15% corporate tax on the 20% taxable share after the 80% IP Box deduction (2026). | ~3% |
|---|---|
| Shareholder: dividends (Non-Dom)Non-Doms pay 0% Special Defence Contribution on dividends. | 0% SDC |
| Healthcare (GHS) on dividendsCapped — on income up to €180,000 (max €4,770 per year). | 2.65% |
| End-to-end (illustrative)Combined effect on qualifying IP income taken as dividends. | ~5% |
Indicative only — not tax advice.
17 years, 60 days
Non-Dom status applies for up to 17 years — the longest non-dom window in the EU. You can become Cyprus tax-resident under the 60-day rule (subject to conditions, including not being tax-resident elsewhere) or the standard 183-day rule. Dividends and interest are 0% SDC for Non-Doms; capital gains on selling qualifying IP are tax-exempt.
17
years Non-Dom
60
days to residency*
Ideal for founder-owned IP companies
Founders of software, SaaS, AI, gaming and other IP-owning companies who can relocate their tax residency to Cyprus gain the most: the company taxes IP profit at ~3%, and the founder extracts it as dividends at close to 0%. We model your exact end-to-end rate and structure it correctly.
How the ~5% end-to-end rate is built
The headline ~5% figure is an owner-level, end-to-end effective rate, not a single tax. It stacks three layers: the company pays roughly 3% on qualifying IP profit under the Cyprus IP Box, the dividend then flows to a Non-Dom shareholder at 0% Special Defence Contribution (SDC), and the only remaining personal charge is the 2.65% General Healthcare System (GHS) contribution, which is capped.
Layer one: under the Cyprus IP Box, 80% of qualifying profit is deducted, so tax applies to 20% of that profit. At the 2026 corporate income tax rate of 15%, the effective company rate on qualifying IP profit is about 3% (15% x 20%).
Layer two: when profit is distributed as a dividend to an individual who holds Cyprus Non-Dom status, the 17% SDC that would normally apply to dividends is not charged. Non-Doms pay 0% SDC on dividends.
Layer three: the individual still pays 2.65% GHS on dividend income, but GHS is capped. Contributions apply only on income up to €180,000 per year, giving a maximum GHS charge of €4,770. Above €180,000 of income, no further GHS is due, so the marginal owner-level cost on additional dividends falls to zero.
Worked owner-level example on €500,000 distributed: the €180,000 GHS ceiling is reached, so GHS is capped at €4,770 (2.65% x €180,000) rather than 2.65% of the full €500,000. Because dividends attract 0% SDC for a Non-Dom, €4,770 is the only personal tax on the distribution. Adding the ~3% already paid inside the company, the combined effective burden across company and owner lands in the region of ~5% overall.
This is educational information, not tax advice. Rates, thresholds and reliefs change; confirm the current conditions and figures with a qualified adviser before relying on them.
- Company: ~3% on qualifying IP profit (15% CIT on the taxed 20% after the 80% IP Box deduction).
- Dividend to Non-Dom: 0% SDC.
- Individual: 2.65% GHS, capped at €4,770 on income up to €180,000.
- €500,000 distributed: GHS capped at €4,770; no SDC; ~5% end-to-end when the company layer is included.
The 60-day tax-residency rule in 2026
You can become Cyprus tax-resident by spending at least 60 days in Cyprus in a tax year, provided you meet the accompanying conditions. This is the alternative to the standard 183-day test and is what makes the Non-Dom plus Cyprus IP Box combination practical for mobile founders.
To rely on the 60-day rule you must: spend at least 60 days in Cyprus during the tax year; maintain a permanent home in Cyprus (owned or rented); carry on a business in Cyprus, be employed in Cyprus, or hold an office such as a directorship in a Cyprus company; and not spend more than 183 days in any other single state.
Important change: from 1 January 2026 the previous condition that you must not be tax-resident in any other country was removed. The 60-day test now turns on the day-count and the Cyprus ties above, rather than on proving you are non-resident elsewhere. Note that another country may still treat you as its resident under its own rules, and a double tax treaty may then decide the tie.
This is general information, not tax or immigration advice. Residency outcomes depend on your specific facts and on other countries' rules; confirm the current conditions with a qualified adviser.
- At least 60 days physically in Cyprus in the tax year.
- A permanent home in Cyprus, owned or rented.
- Cyprus business, employment or directorship ties.
- Not more than 183 days in any single other state.
- From 1 January 2026: the 'not tax-resident elsewhere' condition no longer applies.
What Non-Dom covers (and its limits)
Non-Dom status exempts you from SDC, which is the tax that would otherwise apply to dividends and interest. For a qualifying individual this means 0% SDC on dividends and 0% SDC on interest, and the status can be held for up to 17 years. Cyprus also has no wealth tax and no inheritance tax, which adds to the appeal for founders holding valuable IP.
The limits matter just as much. Non-Dom removes SDC; it does not remove every tax. It does not exempt foreign tax that another country charges at source, and it does not exempt non-dividend income such as employment salary, which remains subject to normal Cyprus personal income tax and, where applicable, GHS.
In practice, the ~5% story works because IP Box profit is taken out mainly as dividends to a Non-Dom, not as salary. Salary drawn from the company is taxed under the ordinary income tax bands, so the mix of dividends versus salary is a design decision with real tax consequences.
This is educational only and not tax advice. The OECD nexus and anti-avoidance rules, plus each person's residency facts, affect the outcome; confirm the current conditions before acting.
- 0% SDC on dividends and interest for up to 17 years.
- No wealth tax and no inheritance tax in Cyprus.
- Does not exempt foreign tax charged by another state.
- Does not exempt salary or other non-dividend employment income.
Getting the structure right
Both halves of the structure have to hold up: the company must earn genuine qualifying IP Box profit, and you personally must be a genuine Cyprus tax resident with Non-Dom status. A strong company position with weak personal residency, or vice versa, undermines the combined ~5% result.
On the company side, the Cyprus IP Box relies on the OECD modified nexus approach. Relief is linked to the R&D you actually carried out to develop the IP, so real substance in Cyprus, people, functions, decisions and documented development activity, is what supports the ~3% company rate.
On the personal side, the 60-day rule needs evidence: day-count records, a permanent home in Cyprus, and a real Cyprus tie such as a directorship or employment. Keep travel logs, tenancy or title documents, and corporate records so residency can be demonstrated if questioned.
Documentation is the connective tissue: nexus and R&D tracking for the IP Box, board minutes and management records for company substance, and residency evidence for the individual. Treat these as living files, kept current each year, not a one-off at setup.
This is general information, not tax or immigration advice. Confirm the current conditions and your own facts with a qualified Cyprus adviser before implementing any structure.
- Company substance: real R&D, people and functions in Cyprus to support the OECD nexus.
- Personal residency: satisfy and evidence the 60-day rule and Non-Dom status.
- Documentation: nexus/R&D tracking, board minutes, and residency records kept current.
Non-Dom & IP Box FAQ
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Reviewed by a Cyprus-admitted advocate · Last updated 21 June 2026.