What is Non Dom and how does it work?

Non-domiciled (non-dom) status is a tax classification for individuals who live in a country but maintain their permanent home, or domicile, in another country. For example, in Ireland, a non-dom status allows individuals to only pay taxes on income earned within the country, not on their worldwide income.

This status is important because it offers significant tax savings for high-net-worth individuals or expatriates with strong connections to another country. By taking advantage of non-dom status, individuals can reduce their tax liabilities on foreign income, making it a valuable tool in international tax planning. It’s especially relevant for people with investments, businesses, or property in different countries, as it provides flexibility in managing income streams while avoiding unnecessary tax burdens.

This guide will take you through everything you need to know about non-domicile status, from the requirements to the benefits to the countries with the best tax regimes for investors and expats.

This is what to expect:

• What is non dom?
• What is a non-dom tax status?
• Benefits of Non-Domicile Tax Status
• Requirements for Having a Non Dom Status
• Seven Non Dom Countries

What is non-dom?

A “non-dom,” short for “non-domiciled,” is a person who resides in a country but is not considered to be domiciled there, meaning they do not have a long-term, permanent home there. A non-domiciled person can also benefit from tax, as some countries have special tax regimes for people who live in the country but do not have their permanent home there. We will get more into this in the next section.

What is a non-dom tax status?

Non-domicile tax status refers to a special classification in some countries where individuals who live there but are not “domiciled” (permanently settled) in the country are taxed differently from residents. This status is particularly beneficial for those with international income, as it allows them to limit the taxes they pay on income earned outside the country where they reside.

Non-dom status can be complicated and depend on many legal definitions. Maintaining it often requires proving ties to another country. But it is commonly used by expatriates or people with significant international connections.

Benefits of Non-Domicile Tax Status

The benefits of non-domicile tax status mainly revolve around favorable tax treatment, especially for people with a lot of international income or assets. These are some of the advantages:

Tax savings on foreign income and gains

Non-doms are generally taxed only on income and gains from their country. Foreign income and gains are not taxed unless brought into the country. This is beneficial for individuals with global investments or businesses.

Remittance basis of taxation

Those who qualify for a non-domicile tax status can choose the remittance basis, which means they only pay tax on foreign income or gains when they transfer them into the host country. This allows them to manage and optimize their tax liabilities by keeping foreign income offshore.

Inheritance tax mitigation

Another benefit of the non-dom status is limiting exposure to inheritance tax. For example, in the UK, inheritance tax is only charged on UK-based assets, not global assets, for non-domiciled individuals. This can help reduce the tax burden for high-net-worth individuals with substantial international holdings.

Wealth preservation

Wealthy individuals can hold assets offshore, keeping them outside the tax net of the country of residence. This provides flexibility in how income is structured, managed, and distributed.

Business and investment flexibility

Non-dom status is beneficial for entrepreneurs, global investors, and professionals with international operations. It allows them to invest or run businesses abroad without worrying about local taxes on their foreign income.

Requirements for Having a Non Dom Status

To qualify for non-dom status, specific criteria usually include the following, though details may vary by country:

Foreign domicile of origin

You must have a permanent home outside the country where you are looking for non-dom status. This is usually determined by your country of birth, family ties, or long-term connections.

Residency in the host country

You must reside in the host country but maintain significant ties to your domicile of origin, showing an intention to return there in the future.

Application process

Depending on the country, you may need to formally apply for non-dom status and provide evidence of your home elsewhere, including proof of residency abroad, family connections, or property ownership.

Duration limitations

Some countries limit how long you can claim non-dom status. For example, in Italy, individuals can hold non-dom status for up to 15 years before they are considered tax residents, meaning they would be liable for taxes on their worldwide income. While non-dom status offers benefits like reduced tax rates on foreign income, it is important to be aware of these time restrictions.

Income remittance

As highlighted previously, non-doms benefit from tax rules that apply only to income or gains brought into the host country. For example, in countries like Italy, only foreign income that is transferred into the country is subject to taxation. Income left abroad is generally not taxed. However, these remittance rules must be followed carefully, as countries often have strict guidelines about what constitutes a “remittance.” Non-compliance with these rules can lead to losing non-dom status or incurring additional taxes.

Seven Non-dom Countries

1. United Kingdom (UK)

The UK’s non-domicile tax regime is one of the most established systems globally, attracting high-net-worth individuals, expatriates, and entrepreneurs. Non-doms in the UK are taxed on their UK-sourced income but can exclude foreign income and capital gains from UK taxes, provided these funds are not brought into the country. However, non-doms face a remittance basis charge after residing in the UK for more than seven years, and they may become “deemed domiciled” after 15 years of residence.

2025 changes to the UK non dom

The UK is reforming its non-dom tax regime, transitioning to a residence-based system effective April 2025. The current remittance basis, allowing non-doms to pay tax on foreign income and gains only when brought into the UK, will be abolished. Instead, all UK residents will be taxed on worldwide income and gains. Additionally, inheritance tax will now apply to individuals defined as “long-term residents” (10 out of 20 years of UK residency), impacting their global estate. Transitional measures, such as tax relief for new residents during their first four years, aim to ease these new changes.

2. Ireland

Ireland’s non-domicile tax regime offers an attractive option for expatriates. Individuals who are non-domiciled in Ireland but live there are taxed on Irish-sourced income and foreign income only if it is transferred into Ireland. This system is especially beneficial for professionals, entrepreneurs, and investors who want to base themselves in a business-friendly environment.

3. Malta

The Malta Global Residence Program (GRP) is a residency program that provides tax benefits to foreign nationals who establish residence in Malta. Under this program,

individuals enjoy a favorable tax regime, with a flat rate of 15% on income remitted to Malta, and exemptions on foreign income not brought into the country. Another way to live in Malta is through its Malta residency by investment program, which offers multiple investment options.

4. Cyprus

Cyprus offers a highly competitive non-domicile tax regime. Non-doms enjoy exemptions from dividends and interest taxation, and foreign income is not taxed at all. The absence of inheritance tax and relatively low personal income tax rates make Cyprus one of the most tax-efficient countries for non-domiciled residents. The country also offers a great Cyprus Golden Visa which provides a path to permanent residency for non-EU nationals who invest in the country. Through a real estate investment of €300,000, people can qualify for residency in this attractive Mediterranean nation.

5. Italy (Flat Tax Scheme)

Italy offers a non-dom-like tax regime for new residents through its Flat Tax Scheme. Non-domiciled individuals can pay a flat annual tax of €100,000 on all foreign income, regardless of the amount, while local income is taxed under standard rates. Alongside this tax scheme, Italy’s Golden Visa program provides a residency route for investors. The Investor Visa allows non-EU nationals to obtain residency through significant investments in the country, such as real estate, business ventures, or government bonds.

6. Spain (Beckham Law)

Spain’s Beckham Law offers non-dom-like benefits to foreign professionals and employees moving to Spain for work. Eligible individuals can pay a flat tax rate of 24% on Spanish income and are exempt from taxes on foreign income for up to six years.

7. Greece (Non-Dom Tax Scheme)

Greece’s non-dom tax scheme is designed to attract wealthy individuals and retirees. It offers a flat annual tax rate of €100,000 on foreign income and provides local tax exemptions for specific investments. Additionally, Greece’s Golden Visa program offers an opportunity for non-EU nationals to gain residency through investment. The program grants residency to foreign investors who invest in the country’s real estate market, with a minimum investment starting from €250,000.

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Frequently Asked Questions about Non-Dom Status

What is non-domicile status?

Non-domicile status allows individuals to live in a country, without being fully subject to its tax laws. Non-doms are usually taxed only on their income and gains that are brought into the country, not on income earned abroad unless it’s remitted.

Who can qualify for non-dom status?

To qualify for non-dom status, an individual must have a domicile/permanent home outside the host country, with the intention of returning there. They also need to meet specific residency requirements, depending on the country.

What are the tax benefits of being a non-dom?

The main tax benefit of non-dom status is the ability to avoid paying tax on foreign income unless it’s brought into the country. Some countries also offer flat tax rates on foreign income and exempt non-doms from wealth taxes.

Can non-doms work in the country?

Yes, non-doms can work in the host country. However, some countries may require non-doms to pay taxes on earnings in the country, even if their foreign income is excluded from taxation unless remitted.

How long can someone maintain non-dom status?

The duration for which a person can maintain non-dom status depends on the country. In Spain, for instance, individuals can claim non-dom status for up to six years, after which they may be deemed domiciled for tax purposes.

Does non-dom status affect inheritance tax?

In some countries, non-dom status can reduce inheritance tax liabilities, as it may exclude foreign assets from being taxed. However, inheritance tax rules vary by country, and some jurisdictions may still tax worldwide assets if a person is deemed domiciled there.