Cyprus Non-Dom Extension Option: Pay EUR 250,000 for 10 Extra Years
The 2026 tax reform introduced an option to extend the Cyprus non-dom SDC exemption from 17 to 27 years by paying EUR 250,000 per 5-year period.
One of the lesser-discussed provisions of the Cyprus 2026 tax reform is the introduction of a paid extension option for the non-dom (non-domiciled) SDC exemption. Currently, the non-dom regime exempts qualifying individuals from Special Defence Contribution (SDC) on dividends, interest, and rental income for 17 years. The new provision allows extending this to 27 years.
How it works
After the standard 17-year non-dom period expires, individuals can opt to pay a lump sum of EUR 250,000 per 5-year extension period. Two consecutive extensions are possible, adding up to 10 extra years (total: 27 years).
- Years 1-17: standard non-dom SDC exemption (no additional cost)
- Years 18-22: EUR 250,000 lump sum for 5-year extension
- Years 23-27: another EUR 250,000 lump sum for the second 5-year extension
Who should consider this
This is designed for high-net-worth individuals (HNWI) with significant dividend or investment income. The math works if your annual SDC savings exceed EUR 50,000/year (i.e., EUR 250,000 / 5 years). Since the new SDC rate on dividends for non-non-dom residents is 5%, you would need annual dividend income above EUR 1,000,000 for the extension to pay for itself.
For individuals with dividend income below EUR 500,000/year, the extension likely does not make economic sense. At that level, the 5% SDC would cost EUR 25,000/year (EUR 125,000 over 5 years), which is less than the EUR 250,000 extension fee.
Timeline considerations
The 17-year clock starts from the first year of Cyprus tax residency, not from the date of applying for non-dom status. If you became a Cyprus tax resident in 2010, your standard non-dom period expires in 2027. You would need to decide on the extension before then.
Bottom line
The extension is a niche provision targeting HNWI with large dividend streams. For most non-dom individuals with moderate investment income, the standard 17-year period is sufficient, and the 5% SDC rate after expiry is still very competitive. But for those with EUR 1M+ in annual dividends, paying EUR 250,000 every 5 years to maintain a 0% SDC rate is a straightforward calculation.