What is Deemed Dividend Distribution (DDD)?
Deemed dividend distribution was a rule treating a company as distributing 70% of its accounting profits two years after the year end. It is abolished for profits earned from 1 January 2026.
Finn does your books in Cyprus
AccountsOS runs full accounting for Cyprus businesses, tax, deadlines and invoicing, in plain English. Ask Finn about yours, no signup needed.
Current Rate (Transitional to 31 December 2027)
Abolished for 2026 profits. Still applies to undistributed 2024 and 2025 profits until 31 December 2027
Example
A company holds undistributed 2025 profits. They stay within the deemed distribution rules until 31 December 2027, so the company plans when to distribute them.
How Deemed Dividend Distribution (DDD) works in Cyprus
Before the reform, SDC was charged on the deemed amount whether or not a dividend was paid. For profits earned from 2026 that no longer happens.
The transition matters. Profits of 2024 and 2025 that are still undistributed remain in the deemed distribution net until 31 December 2027, so the timing of real dividends out of those years needs planning.
Finn flags the trapped profits and compares the cost of distributing older profits with the 5% rate on newer ones. A licensed practitioner should confirm the detail for your company.
Related terms
Special Defence Contribution is a tax on certain passive income received by Cyprus tax-resident and domiciled individuals. From 1 January 2026 the rate on actual dividends is 5%, down from 17%.
Corporate income tax is charged on the worldwide taxable profit of Cyprus tax-resident companies. The rate is 15% from 1 January 2026, up from 12.5% for tax years up to and including 2025.
The Cypriot Ltd is the standard SME company form. It has between 1 and 50 members, no minimum share capital and cannot offer shares to the public.
Confused by Cyprus accounting jargon?
AccountsOS explains Cyprus terms in plain English and applies the right rules to your books automatically.
Try Free