What is the effective tax on a Cyprus dividend?

For a non-domiciled resident, about 17% of the company profit: 15% corporate tax first, then nil income tax and nil defence contribution on the dividend, then 2.65% for health capped at EUR 4,770 a year.

Is the dividend itself taxed?

Not by income tax, for any Cyprus resident, under section 8(20). The Special Defence Contribution reaches it only if you are domiciled in Cyprus.

What about old profits?

Dividends paid out of profits up to tax year 2025 and received by 31 December 2031 keep the old 17% defence rate for a domiciled resident.

Dividend taxation in Cyprus, from company profit to your account

Follow one euro of profit from the company to your account and count what it meets.

Last verified 2026-10-22Next review 2027-01-223 official sources

Whether Cyprus works for you depends on how you earnTalk it through

Dividend taxation in Cyprus, coins stacked in three unequal columns

Dividend taxation in Cyprus is usually described as zero, and that describes one of four steps. Follow a euro of company profit to your bank account and it meets corporate tax, then income tax, then the defence contribution, then the health contribution. Only two of those are nil.

Dividend taxation in Cyprus: the four steps, in order

Step	Non-dom resident	Domiciled resident
1. Corporate tax on the profit	15%	15%
2. Income tax on the dividend	0%	0%
3. Special Defence Contribution	0%	5%
4. Health contribution	2.65%, capped	2.65%, capped

What that comes to

Take EUR 200,000 of company profit paid out to a non-domiciled Cyprus resident. The company pays EUR 30,000 of corporate tax. The dividend of EUR 170,000 meets no income tax and no defence contribution. The health contribution is 2.65% of EUR 180,000, so EUR 4,770, assuming no other income uses the cap.

Total: EUR 34,770 on EUR 200,000, about 17%.

And because the health contribution is capped rather than proportional, that percentage falls as the profit grows. At EUR 1 million of profit it is closer to 15.5%.

That worked example is arithmetic on the rules above. It assumes no other income uses the health cap, and it has not been reviewed by a Cyprus tax adviser for anyone's particular facts.

Step 2 is the one that is genuinely universal

The income tax exemption on dividends is section 8(20) and it applies to every Cyprus resident, domiciled or not, and to foreign dividends as well as Cyprus ones. It is not a non-dom benefit, although it is routinely sold as one.

What non-dom status buys is step 3, and from 2026 that step is 5% rather than the 17% it used to be. The reform narrowed the gap: on EUR 200,000 of dividends, non-dom status now saves EUR 10,000 a year rather than EUR 34,000.

The step before step 1

If the company earns from a qualifying intangible asset it developed, the IP Box deducts 80% of that qualifying profit, so step 1 becomes an effective 3% on that part. Other profit of the same company stays at 15%.

That is the only lever on this chain that moves a large number, and it is also the one with the most conditions attached.

The exemption is in the consolidated Income Tax Law, section 8(20).

Common questions

What is the effective tax on a Cyprus dividend?: For a non-domiciled resident, about 17% of the company profit: 15% corporate tax first, then nil income tax and nil defence contribution on the dividend, then 2.65% for health capped at EUR 4,770 a year.
Is the dividend itself taxed?: Not by income tax, for any Cyprus resident, under section 8(20). The Special Defence Contribution reaches it only if you are domiciled in Cyprus.
What about old profits?: Dividends paid out of profits up to tax year 2025 and received by 31 December 2031 keep the old 17% defence rate for a domiciled resident.

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.

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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.

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
Law 244(I)/2025 amending the Income Tax Law, Official Gazette No. 5070 of 31 December 2025 (cylaw.org) — 15% corporate tax, the 2026 60-day rule, personal tax bands and the 8% crypto rate, from 1 January 2026
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

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.