Cyprus Dividend Tax Rules for Residents & Non-Residents

Cyprus's tax system is a key reason for its appeal as an international business hub, and a significant component of this system is its favorable treatment of dividend income. The tax rules for dividends are a crucial consideration for both residents and non-residents, as they can have a major impact on a person's tax burden. This guide will provide a detailed look at the Cyprus dividend tax rules for 2025, explaining the tax implications for residents and non-residents and the key exemptions that make the island a tax-efficient hub for individuals and companies. For a broader overview of the local tax system, you can read our guide on Cyprus Corporate Tax.

1. Dividend Tax for Cyprus Tax Residents

For individuals who are considered a tax resident of Cyprus, the tax rules for dividends are a key consideration. The tax is not levied through the standard income tax system but through a separate tax known as the Special Contribution for Defence (SDC). The key point is that an individual's domicile status determines if they are subject to this tax.

Non-Domiciled Residents

The most significant benefit of the Cyprus tax system for individuals is the **Non-Dom Status**. A person who is a tax resident of Cyprus but not domiciled in the country is fully exempt from the Special Contribution for Defence (SDC) tax on their worldwide passive income, including dividends. This means that a non-domiciled tax resident of Cyprus pays **0% tax on dividends** they receive. This exemption is not conditional on the amount of the dividends or the country of origin. This is a major advantage for international professionals and investors with a high income from foreign sources. You can read our guide on Cyprus Non-Dom Status for more information.

Domiciled Residents

For a person who is a tax resident of Cyprus and is also domiciled in the country, the tax rules are different. These individuals are subject to the Special Contribution for Defence (SDC) tax on their worldwide dividend income. The SDC tax rate on dividends is **17%**. Domicile is determined by your domicile of origin or your domicile of choice, which is established by having lived in the country for at least 17 out of the past 20 years. This is a very important distinction that has significant implications for your tax obligations. For more on the local life, you can explore our guide on Cyprus for Expats.

2. Dividend Tax for Non-Residents

For individuals and companies that are not considered tax residents of Cyprus, the tax rules for dividends are very straightforward. A non-resident of Cyprus pays **0% tax on dividends** received from a Cypriot company. This is a major benefit for foreign investors and holding companies that have a presence in Cyprus but are not managed and controlled from the island. This is one of the key tax benefits for foreign investment in Cyprus. You can also explore our business directory for all businesses.

3. Key Exemptions and Benefits for Companies

The favorable tax treatment of dividends is not just for individuals. Cypriot companies also benefit from significant exemptions that make the island a tax-efficient hub for international business.

Inter-Company Dividend Exemption

A Cyprus-based company can receive dividends from other companies, both local and foreign, with a **0% tax rate**. This is a major advantage for holding companies, as it allows them to receive dividends from their subsidiaries without any tax burden. This exemption is a key factor in making Cyprus an ideal jurisdiction for a holding company. For more information, you can find a suitable professional corporate services firm in our directory. You can also explore our guide on Tax Incentives for Foreign Investment in Cyprus.