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Dividend tax in Cyprus 2026
Dividends never enter the income tax net in Cyprus; what applies instead is the special defence contribution (SDC), slashed from 17% to 5% in the 2026 reform.
Resident non-doms escape the contribution entirely for 17 years — their only cost is the 2.65% health charge, and only up to EUR 180,000 of income.
At a glance
- top rate
- 5% defence contribution (domiciled residents)
- entry band
- 0% for non-domiciled residents and non-residents
- tax year basis
- Calendar year; withheld at source on Cyprus dividends
- filing deadline
- Foreign dividends self-assessed; local ones settled at source
- residency basis
- The contribution needs both residence and Cypriot domicile
- regime flag
- Deemed-distribution rules abolished from 2026; disguised dividends now taxed at 10%
Rates
How dividends are taxed (2026)
| Rate | Base | Applies to |
|---|---|---|
| 5% | Gross dividend | Special defence contribution (SDC) for resident, Cyprus-domiciled shareholders — was 17% before 2026 |
| 0% | — | Resident non-doms (17 years) and non-residents — no defence contribution, no withholding |
| 2.65% | Gross, capped at EUR 180,000 income | General Healthcare System (GHS) charge — applies to residents including non-doms |
| 10% | Deemed benefit | Disguised dividends: private use of company assets or below-market asset transfers to domiciled shareholders (new 2026) |
Thresholds & allowances
- Non-dom extensionEUR 250,000 per 5 years
Domicile-of-origin non-doms can extend their exemption beyond 17 years for up to two further 5-year periods, per an upfront fee
Residency
Residency trigger
Only shareholders who are both resident and domiciled in Cyprus pay the 5%; you count as domiciled after 17 of the last 20 years of residence, or via a Cypriot domicile of origin.
Non-resident treatment
Dividends leave Cyprus clean: 0% withholding to non-residents, with no further Cypriot claim.
Notes
- Dividends are exempt from income tax for everyone — the defence contribution is the only layer, and the health charge the only cost for non-doms.
- The old rule deeming 70% of undistributed profits paid out after 2 years was abolished from 2026.
- Foreign dividends carry the same 5% (or 0% for non-doms), assessed rather than withheld, with credit for foreign tax.
- From 2031, gains on redeeming fund units will be treated as dividends rather than exempt sale proceeds.
FAQ
How much tax do Cyprus residents pay on dividends?
Domiciled residents pay a flat 5% defence contribution (down from 17% before 2026) plus the 2.65% health charge; non-doms pay only the health charge, which stops at EUR 180,000 of income.
Are dividends to non-residents taxed?
No — 0% withholding and no defence contribution on dividends paid abroad.
Figures: tax year 2026, compiled from public sources. Not tax advice.