The abolition of the non-domiciled (non-dom) tax regime in the United Kingdom, effective 6 April 2025 under the Finance Act 2025, represents a significant shift in global tax planning for high-net-worth individuals (HNWIs). The UK regime previously allowed individuals with foreign domicile status to limit their tax exposure to UK-sourced income and gains, or to foreign income only if it was brought into the UK. With the new legislation, all worldwide income and capital gains will be subject to full UK taxation, regardless of remittance. This change has significant impact on UK’s appeal as a tax-efficient base for internationally mobile individuals and families.
As a result, many are now reconsidering their fiscal residence, and Cyprus has emerged as an attractive option worth considering. With its favourable tax regime and European Union membership, Cyprus offers a strategic combination of lifestyle, legal stability, and tax efficiency.
One of the main attractions of the Cypriot system is the non-domicile (non-dom) regime, which provides significant tax advantages for new residents. Non-domiciled individuals are not subject to the Special Defence Contribution (SDC) on income from dividends and interest, no matter where the income comes from. In addition, foreign income – such as dividends, interest, and rental earnings – is not taxed in Cyprus, even if it is brought into the country.
Cyprus also offers an exemption from capital gains tax on profits arising from the disposal of assets located outside the country. In addition, there is no inheritance or gift tax, which makes Cyprus an attractive jurisdiction for long-term wealth planning and intergenerational asset transfer.
The corporate tax environment is equally competitive, with a flat 12.5% corporate income tax rate—one of the lowest in the European Union. Combined with a well-established legal system based on English common law, and a highly developed network of legal, financial, and professional services, Cyprus presents itself as a modern, reliable, and business-friendly jurisdiction.
For individuals and families impacted by the UK’s reforms, Cyprus offers not only a tax-efficient relocation solution, but also the benefits of EU residency, quality of life, and legal certainty. In the evolving landscape of international tax, Cyprus stands out as a stable and strategic choice.
Maria Papacosta
Junior Partner
