Cyprus dividend withholding tax: 0%, with three exceptions
Dividends out of Cyprus and dividends into your hands, with every rate that applies to each.
Last verified 2026-10-22Next review 2027-01-224 official sources
Whether Cyprus works for you depends on how you earnTalk it through
Cyprus dividend withholding tax is nil on payments to non-resident shareholders in the normal case, and that is what makes a Cyprus company useful as a holding vehicle. Two exceptions exist and both are aimed at low-tax and blacklisted jurisdictions rather than at ordinary shareholders.
Cyprus dividend withholding tax: dividends leaving Cyprus
| Who is paid | Rate |
|---|---|
| Non-resident shareholder, general case | 0% |
| Non-resident company resident in a low-tax jurisdiction holding more than 50%, alone or with connected persons, or otherwise associated | 5% |
| That company, where it sits in an EU non-cooperative jurisdiction | 17% |
The 5% and 17% charges do not apply to listed securities where the payer cannot know the recipient is associated, and the general anti-abuse rule still applies on top. For interest and royalties the pattern repeats: 0% to non-residents generally, 10% on royalties for rights used in Cyprus, and 17% on interest or 10% on royalties to blacklist jurisdictions.
Cyprus dividend tax rate for a resident receiving them
Three separate charges have to be checked, and only the second depends on domicile.
| Charge | Non-dom resident | Domiciled resident |
|---|---|---|
| Income tax, section 8(20) | exempt | exempt |
| Special Defence Contribution, from 2026 | 0% | 5% |
| Special Defence Contribution on pre-2026 profits, to 31 Dec 2031 | 0% | 17% |
| Health contribution | 2.65%, capped at EUR 180,000 income | 2.65%, capped |
That transitional 17% is worth planning around if you are domiciled here. It applies to dividends a Cyprus company pays out of profits of tax year 2025 or earlier, received within six years of 1 January 2026. Which year's reserves a distribution comes out of is a bookkeeping decision with a twelve-point rate difference attached.
Cyprus foreign dividend tax
The exemption in section 8(20) is for dividend income, not for Cyprus-source dividend income. So a Cyprus tax resident holding shares in a German, US or UK company pays no Cyprus income tax on those dividends either. Whether the defence contribution reaches them depends on the same domicile question as domestic dividends, and the health contribution applies regardless.
What this page cannot tell you is what the paying country withholds at source. That is set by its own law and by the treaty with Cyprus, and Cyprus has treaties with around 67 jurisdictions. A dividend from a US company to a Cyprus resident individual meets US withholding before Cyprus sees it, and the Cyprus exemption does not refund it.
Cyprus dividend income tax: the sentence to be careful with
"Cyprus has no dividend tax" is true about income tax and false as a summary. Read in order, the rates a founder actually meets are: 15% corporate tax on the company's profit, then nil income tax on the dividend, then nil or 5% defence contribution depending on domicile, then 2.65% for health up to the cap.
On EUR 200,000 of profit distributed to a non-dom resident that is EUR 30,000 of corporate tax and EUR 4,770 of health contribution, so roughly 17% of the profit in total. A good number, and a different number from zero.
Common questions
- Does Cyprus withhold tax on dividends paid abroad?
- Generally no. There is no defence contribution on dividends paid to non-resident shareholders, with two exceptions: 5% where a non-resident company in a low-tax jurisdiction holds more than 50% alone or with connected persons, and 17% where that company is in an EU non-cooperative jurisdiction.
- What is the Cyprus dividend tax rate for a resident?
- Income tax is nil for every resident, under section 8(20). The Special Defence Contribution is 5% from 2026 for a resident who is also domiciled, nil for a non-dom, and 17% on dividends out of profits up to tax year 2025 received by 31 December 2031. Everyone pays 2.65% for the health system, capped.
- How are foreign dividends taxed in Cyprus?
- The income tax exemption on dividend income is not limited to Cyprus-source dividends, so a Cyprus resident receiving dividends from a foreign company pays no Cyprus income tax on them. The defence contribution reaches them only if the recipient is domiciled here, and the health contribution applies either way.
- What about interest?
- From 2026 all interest income of individuals is exempt from income tax and is charged to the defence contribution instead, at 17% for a domiciled resident and nil for a non-dom.
Whether Cyprus works for you depends on how you earn
Where you live is only half of it. We can walk through your position with you, including the cases where Cyprus tax residency does not give the result people expect. This is general information, not tax advice for your circumstances.
Sources
Every legal, fee and procedural statement on this page is taken from the sources below and was checked on 2026-10-22. Where they change, this page changes.
- Law 245(I)/2025 amending the Special Contribution for the Defence Law (cylaw.org) — Deemed domicile after 17 of 20 years, dividend SDC rates and the EUR 250,000 lump-sum option
- Income Tax Law 118(I)/2002, consolidated text (cylaw.org) — Tax residency (section 2), dividend exemption (section 8(20)), IP Box (section 9(1)(κ)) and rates
- Special Contribution for the Defence Law 117(I)/2002, consolidated text (cylaw.org) — Who pays the Special Defence Contribution: residents who are also domiciled in Cyprus
- PwC Worldwide Tax Summaries: Cyprus corporate withholding taxes (reviewed 4 August 2026) — Withholding rates on dividends, interest and royalties, and the treaty network (secondary source)
Related
This page is general information about Cyprus rules as published by the authorities named above. It is not legal or tax advice for your circumstances, and immigration outcomes depend on your nationality, documents and individual case. See our legal and tax information disclaimer.