Bulgaria vs Cyprus non-dom: flat 10% vs the 60-day rule

So what's the real comparison after Cyprus's 2026 reform?

Bulgaria's appeal is straightforward: 10% personal income tax, 10% corporate income tax and generally 5% tax on dividends. Cyprus's headline story is the non-dom regime, which exempts qualifying individuals from Special Defence Contribution (SDC) on dividends and interest for up to 17 years, with an option to extend to 27 years by paying €250,000 per five-year block.

At the same time, Cyprus raised its corporate income tax from 12.5% to 15% from 1 January 2026, cut SDC on dividends for domiciled residents from 17% to 5% for profits arising from 2026, abolished SDC on rental income for everyone, and relaxed the 60-day residency rule by removing the requirement not to be tax resident elsewhere.

Which country gives you the lower headline rate?

Is Cyprus's non-dom status automatic for newcomers?

For a person who is not domiciled in Cyprus by origin, non-dom status is generally automatic upon becoming Cyprus tax resident, provided they have not been Cyprus tax resident for 17 of the preceding 20 years. The exemption from SDC on dividends and interest then runs for 17 tax years from the first year of Cyprus tax residence.

From 2026, the regime can be extended by up to 10 additional years (two five-year blocks) by making an election and paying €250,000 per block to the Tax Commissioner, subject to conditions and deadlines. This gives a potential total runway of 27 years for eligible individuals.

Non-dom status does not alter Cyprus's personal income-tax rates on employment or self-employment income. Its core benefit is the 0% SDC position on dividends and interest that would otherwise be chargeable.

How do you become tax resident in Cyprus under the 60-day rule?

The 60-day residency route was amended with effect from 1 January 2026. The condition that you must not be tax resident in any other single state was removed, making it easier to combine with another country's residence claim, though double residence increases the risk of dual tax residence and treaty tie-breaker analysis.

For a given tax year, the 60-day rule generally requires all of:

• At least 60 days physically present in Cyprus during the tax year.
• No more than 183 days in aggregate in any other single country during that tax year.
• Carrying on business, employment or holding an office in a Cyprus tax-resident company during the year.
• Maintaining a permanent residential property in Cyprus, owned or rented and available for your use throughout the year.

Only once you are Cyprus tax resident can you access non-dom status and its SDC exemptions.

What do you actually pay on dividends and interest in Cyprus?

For a Cyprus tax resident who is non-domiciled, the position from 2026 is:

• Dividends: 0% SDC for the duration of non-dom status.
• Interest: 0% SDC for the duration of non-dom status.
• Rental income: SDC on rents was abolished for all residents from 2026, so this is no longer a differentiator.

For a Cyprus tax resident who is domiciled or deemed domiciled:

• Dividends from 2026 profits: SDC reduced to 5%.
• Dividends from pre-2026 profits: generally 17% SDC if distributed on or before 31 December 2031, under transitional rules.
• Interest: generally 17% SDC, subject to exemptions and treaties.

Non-dom status does not remove Cyprus income tax on employment or self-employment income, nor social insurance or GESY contributions. It specifically shelters dividends and interest from SDC.

How does Bulgaria's flat 10% framework work?

Bulgaria generally applies a 10% flat personal income tax and a 10% corporate income tax. Unlike Cyprus's non-dom regime, these headline rates are not limited to a designated list of activities or contingent on maintaining a special status.

Dividends distributed by a Bulgarian company are generally subject to 5% withholding tax where paid to individuals and certain non-EU/EEA corporate recipients. The shareholder's own residence country may levy further tax, while EU/EEA corporate-shareholder treatment and treaty relief need fact-specific confirmation.

For founders operating through a Bulgarian company, the simplified sequence is often: the company earns taxable profit; the company pays 10% corporate tax; a dividend distribution to an individual shareholder generally incurs 5% tax on the post-corporate-tax amount.

What about social security and health contributions?

In Bulgaria, a self-insured person generally pays approximately 27.8%, or 31.3% if sickness and maternity cover is included, on insurable income. From 1 August 2026, the monthly insurable-income range stated in current guidance is €620.20 to €2,300, though annual equalisation and individual status can matter.

In Cyprus, a self-employed individual generally faces:

• Social insurance on relevant self-employment earnings, commonly around 20–21% in total between employee and employer-equivalent portions, subject to ceilings.
• GESY (healthcare) at 4% on relevant income for the self-employed, plus 2.65% on dividends and other personal income, up to an annual cap of €180,000 for GESY purposes.

Neither system should be reduced to one percentage. Your legal form, business activity, remuneration method and actual coverage determine the real cost.

Which country is better for your company?

Cyprus remains a credible EU corporate jurisdiction with an English common-law system, extensive treaty network and established fund and holding structures. But from a pure rate perspective, Bulgaria is now lower for a standard operating company.

For an EU-facing founder-led company without IP Box benefits or specific Cyprus business reasons, Bulgaria's 10% company tax and 5% dividend tax are often simpler and cheaper. Cyprus can be stronger for IP-heavy businesses, regional holding structures or where non-dom status meaningfully shelters the shareholder's dividend and interest income.

What about setup and running costs?

Indicative 2026 ranges for a small active company, excluding visas and premium office.

Bulgaria

• Setup: roughly €1,500–€2,500 (formation, registration, initial filings).
• Annual compliance: roughly €2,000–€3,500 (accounting, VAT/corporate returns, registered office/services; audit generally not mandatory for small firms).

Cyprus

• Setup: commonly €2,000–€4,000 depending on provider, licences and complexity.
• Annual compliance: commonly €3,000–€5,500+ for a small active company, including accounting, audit, registered office, secretary and annual return.

Living costs also differ. Third-party data and local reporting place Limassol rents roughly double Sofia levels, with overall living costs in Cyprus's main expat hubs materially higher than Bulgaria's capital.

Who is Bulgaria actually best for?

• Founders who want a broadly available 10% personal and corporate tax framework.
• EU-facing consultants, agencies, ecommerce operators and service businesses.
• Owner-managed companies intending to retain or distribute profit under a simpler company-and-dividend structure.
• People who value lower fixed costs and less reliance on a specialist newcomer-tax regime.
• Entrepreneurs whose work does not fit Cyprus's IP Box, fund or regional-holding use cases.

Who should still consider Cyprus?

• Individuals who qualify for non-dom status and expect to draw significant dividend or interest income as Cyprus tax residents.
• IP-heavy businesses that can use the IP Box to reach an effective corporate rate around 3%.
• Regional holding, fund or treasury structures that benefit from Cyprus's treaty network and common-law environment.
• People who prioritise Cyprus's lifestyle, international schools, regional connectivity or specific business ecosystem more than the lowest possible tax rate.

What should you check before making a move?

• Establish tax residence first — determine where you, your spouse and your company are resident under domestic law and relevant tax treaties.
• Map income by category — salary, consulting income, company profit, dividends, capital gains, rent, pensions, interest and crypto can receive different treatment.
• Test non-dom eligibility and runway — confirm your domicile status, the 17-year clock, and whether any extension to 27 years is relevant or affordable.
• Separate company tax from personal tax — a low corporate rate does not automatically mean low tax when you take money personally.
• Model social security, health and GESY — these can be a material part of the real cost for active founders and freelancers.
• Review other-country exposure — controlled foreign company rules, permanent establishment, management and control, exit tax, source-country withholding and reporting obligations.
• Use a three-year model — incorporation, accountant, payroll, social security, rent, private health cover, travel, visa/residency costs, banking, tax filings and adviser fees, not just income-tax rates.

Sources

• Cyprus's 2026 tax reform legislation and explanatory materials on corporate tax, SDC, non-dom extensions and the 60-day rule.
• Cyprus Special Defence Contribution Law and 2026 amendments on dividends, interest and rents.
• Cyprus Social Insurance and GESY legislation and 2026 rate tables.
• Bulgaria's Corporate Income Tax Act, Article 20, and National Revenue Agency guidance for corporate and withholding-tax treatment.
• Bulgarian self-insurance guidance for 2026 contribution rates and income limits.
• Third-party cost-of-living and rent data for Sofia, Limassol, Nicosia and other cities, used as directional market estimates.