How much tax do Cypriot directors pay on dividends?
From 1 January 2026, domiciled Cyprus tax residents pay 5% SDC on actual dividends, down from 17%. Non-domiciled residents pay 0% SDC. GESY of 2.65% also applies to dividend income within the €180,000 annual cap.
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Detailed Explanation
## SDC on dividends
Special Defence Contribution on actual dividends paid to Cyprus tax-resident and domiciled individuals is 5% from 1 January 2026, cut from 17%. The 5% rate applies to distributions out of post-2026 profits.
## Non-domiciled residents
Non-domiciled Cyprus tax residents pay 0% SDC on dividends and interest, for 17 years of residence. The 60-day tax-residency rule can establish residency for individuals who are not tax-resident elsewhere.
## GESY on dividends
GESY health contributions of 2.65% also apply to an individual's dividend income, within the €180,000 annual income cap per person.
## Deemed distribution
The deemed dividend distribution regime is abolished for profits earned from 2026. It still applies to undistributed 2024 and 2025 profits until 31 December 2027, so plan distributions of those years.
## What Finn does
Finn compares the cost of distributing older profits with newer ones, flags the GESY cost, and does not decide domicile status. Confirm that with a licensed practitioner.
Source: https://www.gov.cy/taxreform/forologika-ofeli-gia-epixeiriseis-nomika-proswpa/
Real-World Examples
Domiciled director
A domiciled resident director takes a €10,000 dividend from post-2026 profits. SDC at 5% is €500, and GESY at 2.65% is €265.
Non-domiciled director
A non-domiciled resident takes the same dividend and pays no SDC. GESY at 2.65% still applies, so €265.
Older profits
A company distributes 2025 profits before 31 December 2027, while they are still in deemed distribution.
Common Mistakes to Avoid
- Quoting the old 17% rate
- Forgetting GESY applies to dividends
- Assuming non-doms pay no health contribution
- Ignoring trapped 2024 and 2025 profits
Frequently Asked Questions
What is the dividend SDC rate in 2026?
5% for domiciled residents.
What do non-doms pay?
0% SDC on dividends and interest.
Is GESY charged on dividends?
Yes, at 2.65% within the €180,000 cap.
Does SDC apply to rents?
No. It is abolished for everyone from 2026.
Is passive interest still taxed?
Yes, at 17% for domiciled residents.
Practical Tips
- Confirm domicile status before planning
- Model dividend and GESY together
- Plan distributions of 2024 and 2025 profits early
- Keep dividend minutes and records
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