In short
- The directors decide an interim dividend, the general meeting a final one. Both come out of profits.
- Contribution in 2026: 5% on profits of 2026, 17% on profits up to 2025, 0% for non-doms.
- The company withholds the contribution and 2.65% GeSY and pays them by the end of the next month.
- Deemed distribution ends with the profits of 2025. For 2024 the date is 31 December 2026.
In this guide
Rules: what governs the dividends of a Cyprus company
Three sources govern a dividend: the Companies Law, Cap. 113, the case law behind it and the articles of association of the company. The law itself says little on the dividends of a private company. The procedure sits in the articles, and a company can adopt Table A, the model articles in the First Schedule of the law. Its regulations 114 to 122 set five rules:
- The general meeting declares a dividend, and it cannot exceed the amount the directors recommend.
- The directors can pay interim dividends that the profits of the company justify.
- A dividend is paid out of profits alone.
- Shareholders are paid in proportion to the amounts paid up on their shares, unless a class of shares carries its own right.
- A dividend bears no interest against the company.
Sections 169A to 169C of the law add limits on distributions and conditions for interim dividends. They apply to public companies. A private company follows its articles and the rule on profits.
The tax on a dividend, and what the company withholds from it, is part of our Cyprus corporate tax services.
Interim and final dividends: who decides, and on which accounts
| Question | Interim dividend | Final dividend |
|---|---|---|
| Who decides | The board of directors | The shareholders in general meeting, on the directors' recommendation |
| When | During the financial year, before the yearly accounts exist | After the financial year, usually at the annual general meeting |
| Which accounts support it | Interim accounts that show the profit to cover it | The audited financial statements of the year |
| The amount | What the profits justify, in the directors' judgement | No more than the directors recommend |
Either way the money comes from the retained profits of the company. Articles written for the company can add rules on how often dividends are paid and how the amount is set, and the directors then follow those.
A founder who wants money from the company in its first year uses an interim dividend. It needs interim accounts drawn from books that are up to date: see accounting services in Cyprus.
How to distribute dividends in Cyprus: seven steps
- Establish the profit. For a final dividend, wait for the audited financial statements. For an interim one, prepare interim accounts up to a recent date.
- Read the articles. They can set classes of shares, a procedure of their own or a limit.
- Hold the board meeting. The directors resolve to pay an interim dividend, or recommend a final one. The minutes record the amount for each share and the year of the profits.
- Hold the general meeting, for a final dividend. The shareholders declare it by resolution, at or below the recommended amount.
- Work out each shareholder's amount and what to withhold. From a shareholder who is tax resident and domiciled in Cyprus the company withholds the Special Defence Contribution and GeSY, the health contribution. A non-dom shareholder first gives the company a declaration on form T.D.624, and it then withholds no defence contribution.
- Pay the dividend, and give each shareholder a certificate with the amount, the contribution withheld and the year in which the profits were earned.
- Pay what was withheld to the Tax Department by the end of the following month, with the declaration on form T.D.603. During 2026 that form is moving to the Tax For All portal, so the company creates the payment in the Tax Portal under codes 0603 and 0703.
For a dividend paid in October 2026, step 7 falls on 30 November 2026.
Cyprus dividend tax in 2026: what each shareholder pays
Dividends bear no income tax in Cyprus. Two charges can apply in its place: the Special Defence Contribution, which follows tax residence and domicile, and GeSY, which follows tax residence alone.
| Shareholder | Special Defence Contribution | GeSY |
|---|---|---|
| Individual, tax resident and domiciled in Cyprus | 5% on dividends from profits of 2026 and later. 17% on dividends from profits up to 2025 | 2.65% |
| Individual, tax resident with non-dom status | 0% | 2.65% |
| Individual who lives abroad | 0% | None |
| Company resident in Cyprus | 0%. A transitional 17% on profits of 2024 and 2025 where its own shareholders are resident and domiciled in Cyprus | None |
| Company abroad | 0%. For a company that holds more than 50%: 17% in a jurisdiction on the EU list of non-cooperative jurisdictions, 5% in a low-tax jurisdiction | None |
The rate follows the year of the profit. A dividend paid in 2027 from the profit of 2025 still bears 17%, and one paid from such a profit after 31 December 2031 bears 5%. That is why the certificate names the year of the profits.
GeSY is charged on the first €180,000 of a person's income of the year, counted across salary, dividends and other income, so it stops at €4,770. Cyprus non-dom status lasts until the shareholder has been tax resident in Cyprus for 17 of the last 20 years.
The dividend itself comes from profit that has borne the Cyprus corporate tax rate of 15%. Dividends that a company receives are covered in the guide to a Cyprus holding company.
We do this for you Cyprus corporate tax services from €290 a month with accounting
Worked example: a €60,000 dividend for four shareholders
A company declares a dividend of €60,000 to its one shareholder, who has no other income in the year. What arrives depends on who the shareholder is and on the year of the profit.
| Shareholder | Contribution | GeSY | Received |
|---|---|---|---|
| Resident and domiciled in Cyprus, profit of 2026 | €3,000 (5%) | €1,590 | €55,410 |
| Resident with non-dom status, profit of 2026 | €0 | €1,590 | €58,410 |
| Lives abroad, profit of 2026 | €0 | €0 | €60,000 |
| Resident and domiciled in Cyprus, profit of 2025 | €10,200 (17%) | €1,590 | €48,210 |
The last line is the shareholder of the first line, paid from an older profit: €7,200 more goes to the Tax Department. A shareholder who lives abroad declares the dividend in the country of residence, under its own rules and its tax treaty with Cyprus.
Deemed dividend distribution: the last two years of the rule
Until 2025 Cyprus did not wait for the dividend. Two years after the end of a tax year, 70% of the accounting profit of that year was treated as distributed. The company paid 17% on the share of its owners who were tax resident and domiciled in Cyprus. The 2026 reform abolished the rule for profits of 2026 and later.
Two years remain. Profit of 2024 that is not distributed by 31 December 2026 falls under the rule, and so does profit of 2025 that is not distributed by 31 December 2027.
Suppose a company with one owner, resident and domiciled in Cyprus, made an accounting profit of €50,000 in 2024 and has paid no dividend from it. On 31 December 2026, 70% of it, €35,000, counts as distributed, and the company owes €5,950. A dividend paid from that profit before the date lowers the amount. What was taxed as deemed is not taxed again when it is paid out.
A company whose owners are non-dom or live abroad stands outside the rule. The declaration for the profits of 2023 was due on 31 January 2026, a month after its two years ended. The same pattern puts the profits of 2024 at the end of January 2027. The other dates are in the Cyprus tax calendar.
Disguised dividends: company assets in the owner's hands
From 2026 the law also taxes a benefit that takes the place of a dividend. It catches the private use of a company asset by a shareholder who is resident and domiciled in Cyprus, or by a person connected with that shareholder. The market value of the use is a disguised dividend, taxed at 10%. The same applies where the company sells an asset to the shareholder below its market value: the difference is taxed.
Three cases stay outside: an asset the shareholder donated to the company, a benefit already taxed as a benefit in kind, and a distribution on a reduction of capital or a liquidation.
A shareholder who does not want the dividend: the options
A third option is a capital increase paid from the undistributed amount, which raises that shareholder's stake. Under the 2026 rules a capital increase paid from distributable reserves counts as a dividend for a shareholder who is resident and domiciled in Cyprus, so the contribution follows.
Where the articles follow Table A, the general meeting can also direct that a dividend is paid in assets, such as shares of another company.
Before a dividend we work out what each shareholder will receive and what the company has to withhold. It is part of how we compute and file the taxes of your Cyprus company.
