Taxation of Dividends

  • Dividends are exempt from corporation tax
  • Dividends received by a company are not subject to Special Defence Contribution (SDC) unless:

The non-resident company paying the dividend engages directly of indirectly by more than 50% in activities that lead to investment income and the overseas tax burden on its income is significantly lower than the Cyprus tax burden (less than 6,25%) or

– Dividends were not deductible from the taxable income of the dividends paying company

The dividends paid by a resident company to another resident company are exempt from SDC.

When the company pays dividends is obliged to give to its shareholders a certificate stating the following:

  • The amount of the dividends paid to the shareholder and
  • The special defence contribution that was held by the company in respect of the dividends paid (if applicable).

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