In 2024, an unprecedented number of high-net-worth individuals left the UK, seeking refuge from the restrictive tax changes imposed by the Labour Party. This mass exodus, the largest recorded in recent history, saw approximately 10,800 wealthy individuals—including centi-millionaires and billionaires—relocate, driven by the abolition of the non-dom tax regime.
While nations like Italy, Malta, and Switzerland have seen an influx of these affluent migrants, Cyprus has emerged as one of the most attractive destinations. The Mediterranean island offers a compelling combination of lifestyle and tax benefits, especially through its renowned non-domicile program, which is widely considered one of the world’s most appealing personal income tax regimes.
Why Cyprus?
The Cyprus non-domicile program provides a significant tax advantage to foreign residents. Under this program, non-domiciled individuals in Cyprus are exempt from tax on their worldwide dividends and interest income for a period of up to 17 years. This makes Cyprus an exceptionally attractive option for UK expatriates who face heavier tax burdens at home.
In addition to tax benefits, Cyprus offers political stability, a high standard of living, and access to the rest of the European Union, making it not only a safe haven for wealth but also a strategic base for business and travel within the region.
The Exodus from the UK: A Closer Look
The recent overhaul of the UK tax system, particularly targeting non-domiciled residents, has prompted these individuals to move their wealth to more tax-friendly jurisdictions. The changes, which included increases in capital gains tax and national insurance contributions, have significantly affected the investment landscape. This shift is evidenced by the relocation of notable figures such as Charlie Mullins and Christian Angermayer, who sought more favorable fiscal environments in Spain and Switzerland, respectively.
Moreover, the removal of the non-dom status, which previously allowed certain UK residents to limit their tax exposure on foreign income, has been a critical factor in this migration. This regime change not only impacts the individuals but also the UK economy at large, potentially leading to a loss of billions in investment capital previously contributed by these wealthy individuals.
Cyprus as a Solution
For UK nationals reconsidering their domicile due to tax restructuring, Cyprus stands out as a logical and beneficial relocation choice. The Cyprus non-domicile status not only offers favorable tax conditions but also stability and access to an expanding market within the EU. Here’s a closer look at why Cyprus is increasingly favored by UK HNWIs:
Tax Benefits of Cyprus Non-Domicile Status
The Cyprus non-domicile regime is one of the most attractive in the world for high-net-worth individuals seeking tax efficiency. Under this program:
- Exemption from Dividend and Interest Income: Non-domiciled residents are exempt from taxation on their worldwide dividend and interest income.
- No Inheritance Tax: Cyprus does not levy inheritance tax, making it an ideal jurisdiction for wealth preservation across generations.
- Exemption from Capital Gains Tax: Except for gains from the disposal of real estate in Cyprus, capital gains on other assets are not taxed, including shares in companies.
In addition, all Cyprus tax residents, whether non-domiciled or not, are entitled to a full exemption from tax on the disposal of securities, including both public and private stocks and bonds.
The 60-Day Rule
One of the standout features of the Cyprus tax system for non-domiciles is the 60-day rule, which provides a straightforward pathway to tax residency. To qualify under this rule, individuals must:
- Not reside in any other single country for more than 183 days in the tax year.
- Reside in Cyprus for at least 60 days during the tax year.
- Carry out any business in Cyprus, be employed in Cyprus, or hold an office with a Cyprus tax resident company at any time during the tax year.
- Maintain a permanent residence in Cyprus (owned or rented).
This rule is particularly advantageous for those who may not meet the more common 183-day requirement in other jurisdictions, offering a flexible yet legally robust route to establishing tax residency.
Economic and Lifestyle Benefits
Beyond tax benefits, Cyprus offers a high standard of living, excellent healthcare, and education facilities, and is ranked as one of the safest countries in the world. Its strategic location at the crossroads of Europe, Asia, and Africa provides unique business opportunities and excellent air connectivity.
Investment Opportunities
Cyprus also presents a range of investment opportunities in real estate, energy, tourism, and business sectors. The government’s encouragement of foreign investment with incentives and support services makes it an even more attractive destination for entrepreneurs and investors.
For UK HNWIs looking to optimize their tax positions and secure their financial futures against an uncertain economic backdrop in Britain, Cyprus is ready to welcome them with an advantageous tax regime and a quality of life that is hard to match.
For more information or to schedule a consultation, please contact our team at Savva & Associates.
Please get in touch with our team at:
Charles Savva Managing Director BA, MBA, TEP, CA [email protected] +357 22516671 | Mina Pieri Senior Manager FCCA, MBA [email protected] +357 22510207 | Makis Pavlou Account Manager FCCA [email protected] +357 22510257 |