Cyprus taxes dividends differently, depending on whether or not you are a Cyprus Tax Resident or not or if you are a Cyprus Tax Resident but non domicile!

How are dividends from Cyprus companies taxed? 

That’s a great question and the answer depends on who the recipient of the dividends is! 

The easier way to look at it is if you are not living in Cyprus your dividends will be 100% tax free. However, this changes when the shareholders reside in Cyprus! 

Shareholders of Cyprus companies do not need to pay Cyprus dividend tax in 2 cases: 

a) if there are not living in Cyprus and as a result, they are not Cyprus tax residents 

b) if they are living in Cyprus and they are Cyprus tax residents non domiciled (refer to the non-domiciled rule) 

In these two cases, anyone who owns either 100% or part of the share capital of the Cyprus company does not suffer any dividend tax. This goes for the Cyprus company itself as well as there is no cost to the company or tax when it pays out dividends. Cyprus dividend taxes are strictly tax at the personal level. 

What happens to Cyprus tax residents earning dividends? 

Cyprus shareholders (of Cyprus companies) must pay the dividend tax which is the special defense tax. This tax is payable by the company on behalf of the shareholders, so the shareholders receive their dividends tax free. 

Taxation is a complex area, and you should consider consultation with a licensed tax expert from our network. 

Feel free to contact us as well at support@finhub.com.cy for further guidance and advice on the matter.