Cyprus corporate tax at 15%: how much reaches you after dividend tax?

Losses: seven years, with a catch on a change of owner. From 2026 a tax loss the company cannot use in the year it arises is carried forward and set against its income of the following years, for up to seven years from the end of the loss year (five before), where its accounts must be audited. A loss from before a change in the ownership of the company's shares is not carried past it if, within any three years, the ownership changes and the nature of the business changes substantially, or if the ownership changes after the business has shrunk to little or nothing and before it substantially revives. The Tax Department's example: a 2019 loss can be set against 2026 profits.

Income Tax Law 118(I)/2002, consolidated text (CyLaw) · Tax Department, presentation on the Income Tax (Amending) (No. 4) Law 244(I)/2025 (March 2026)

Paying in advance. A company submits its own estimate of the year's taxable income and tax before 31 July, and pays that provisional tax in two equal instalments, on 31 July and 31 December. A company formed or registered here, or that becomes resident here, after 30 June submits its estimate and pays in one instalment by 31 December of that year.

Assessment and Collection of Taxes Law 4/1978, consolidated text (CyLaw)

The return, and when the date moves. From tax year 2026 a company's return is due 13 months after the year ends: the 2026 return by 31 January 2028, two months earlier than the 31 March that applied up to tax year 2025. The tax still owed is paid by the same day. The Council of Ministers can set a later date by decree; if the Tax Commissioner announces a later date for everyone with the same deadline, a return filed by then carries no late-filing charge, nor, if its tax is paid on filing, any late-payment charge or interest.

Tax Department, company tax return (T.Φ.4) and return of the self-employed with audited accounts (T.Φ.1) · Assessment and Collection of Taxes Law 4/1978, consolidated text (CyLaw)

Paying late. From 2026 a late company return costs €250, or €500 if turnover or assets exceed €1 million. Tax paid late costs 5% of the amount, and another 5% if it is still unpaid two months after the deadline. Defence contribution withheld from a dividend and paid over late carries the same 5% and further 5%, plus interest; failing an SDC duty with a deadline costs a company €1,000, or €2,000 above €1 million of turnover or assets. GESY withheld and paid over late is charged differently: the Tax Department says 1% for each month of delay, plus interest.

Assessment and Collection of Taxes Law 4/1978, consolidated text (CyLaw) · Special Defence Contribution Law 117(I)/2002, consolidated text (CyLaw) · Tax Department, default interest, charges and penalties: direct taxation

Registering, and filing every year. The Tax Department gives a company 60 days to register in the Tax Registry, counted from its incorporation, from its registration here if it was incorporated abroad, from becoming resident here, or from first having income the Income Tax Law taxes. Registration is online only, through Tax For All; from 1 July 2026 a company registered with the Registrar of Companies (numbers starting HE or AE) must apply through Tax For All with CY Login, and other applications are rejected. A company incorporated or resident in Cyprus files a return for every tax year, whether or not it had income that year.

Tax Department, registration in the National Tax Registry: businesses · Assessment and Collection of Taxes Law 4/1978, consolidated text (CyLaw)

When your company counts as resident here. From 2026 a company is tax resident in Cyprus if it is managed and controlled here, or if it is incorporated here, unless a double tax treaty provides otherwise for an incorporated company. A company that moves its registered office or seat to Cyprus counts as incorporated here. That is the company's tax residence, not yours: your own is tested separately, on your own days in Cyprus and the conditions that go with them.

Income Tax Law 118(I)/2002, consolidated text (CyLaw)

Whose share is charged. The contribution is charged only on the share that belongs, directly or indirectly, to shareholders tax resident and domiciled here on the date of the deemed distribution.

Special Defence Contribution Law 117(I)/2002, consolidated text (CyLaw)

What counts as profit here. For the deemed dividend, profit means the company's accounting profit under accepted accounting principles, after any transfers to reserves a law requires; group loss relief and amounts from revaluing property do not change it. The corporate tax taken off first includes defence contribution, capital gains tax and any foreign tax not credited that year. That is a different base from the taxable income corporate tax is charged on.

Special Defence Contribution Law 117(I)/2002, consolidated text (CyLaw)

On dissolution. When a company is dissolved, its profits of the last five years that arose up to and including 2025, and have been neither paid out nor already deemed paid out, count as paid out, with 17% due on the same shareholders' share. If the company resolves to dissolve or liquidate voluntarily, the deemed-dividend declaration and the contribution are due within one month of that resolution, and the Tax Commissioner can assess the company for it.

Special Defence Contribution Law 117(I)/2002, consolidated text (CyLaw)

No charge twice. Defence contribution paid on a deemed dividend is not refunded when the company later pays those profits out; instead, the later dividend is reduced by the amount already deemed paid out, so it is not charged again. A shareholder who is not resident in Cyprus and receives a dividend out of profits deemed paid out under the rule as it stood before 2026 may apply for a refund of the contribution on it, for shares held on 31 December 2025.

Special Defence Contribution Law 117(I)/2002, consolidated text (CyLaw)

GESY on a deemed dividend. For a shareholder who is tax resident and domiciled here, the Tax Department says GESY is also due on a deemed dividend, and the company withholds it on the deemed date.

Tax Department, guide to the GESY contribution: charge, exemptions, terms, rates (18 March 2021)

Disguised dividends. From 2026 a disguised dividend is, under valuation rules the law sets, the market value of a company asset used by a shareholder or a person connected with them, or the gap between an asset's market value and the price a shareholder or connected person pays the company for it. A shareholder who is tax resident and domiciled here pays 10% defence contribution on it when it comes from a Cyprus tax-resident company. The rule does not apply where the employment-income rules of the Income Tax Law apply, or to assets handed to a shareholder on a capital reduction, dissolution or liquidation.

Special Defence Contribution (Amending) (No. 4) Law 245(I)/2025, Official Gazette No. 5070

Loans from the company. The rule covers loans and any other credit, including cash withdrawals, to directors, to individuals who are shareholders — directly or, from 2026, indirectly — and to their spouses and relatives up to the second degree; balances from trading are left out. The benefit is 9% a year on the balance at the end of each month, and the tax on it is assessed and paid under the rules for tax withheld from pay.

Income Tax Law 118(I)/2002, consolidated text (CyLaw)

Capital reductions, dissolution and liquidation. When a company hands assets to a shareholder on a capital reduction, a dissolution or a liquidation, their market value less the capital that shareholder actually paid in, and less any capital gains tax paid on those assets, counts as a dividend. Capital already returned earlier reduces the capital paid in, and a disguised dividend already charged on the same asset reduces the dividend. Turning distributable reserves into share capital also counts as a dividend. For the defence contribution, that matters only to someone tax resident and domiciled here.

Special Defence Contribution Law 117(I)/2002, consolidated text (CyLaw)

What qualifies. Under the 2016 Regulations, a qualifying asset is intellectual property that results from research and development and that a business acquired, developed or exploits, including one it owns only economically. Patents and software qualify, as do utility models, protections for plants and genetic material, orphan drug designations and patent extensions. Other legally protected assets that are non-obvious, useful and novel qualify too where the business earns no more than €7.5 million a year in gross income from all its intangible assets and its group no more than €50 million in worldwide turnover, both on a five-year average, and a competent authority certifies them. Trade names, brands, trademarks, image rights and other marketing intellectual property never qualify. The box is open to companies tax resident in Cyprus and to permanent establishments taxed here.

Income Tax (Intangible Assets) Regulations 2016 (Κ.Δ.Π. 336/2016), Official Gazette No. 4976

How much of the profit qualifies. Only qualifying profit gets the deduction: the income from the asset less the costs of earning it, scaled by the company's own R&D spending on it, and R&D bought from unrelated parties, plus a limited uplift, as a share of all its spending on the asset — including buying the asset and R&D bought from related parties. The more of the R&D the company does itself or buys from unrelated parties, the larger the share that qualifies.

Income Tax (Intangible Assets) Regulations 2016 (Κ.Δ.Π. 336/2016), Official Gazette No. 4976

Losses, waiving, and the older regime. A company can waive all or part of the deduction in any year, and the tax on that profit is then higher than 3%. If the qualifying calculation gives a loss, only 20% of it can be set off or carried forward. An earlier IP regime applied, at the latest, until 30 June 2021, and is no longer available.

Income Tax Law 118(I)/2002, consolidated text (CyLaw)

What changed in 2026. The 80% did not change in 2026; before 2026 the same deduction worked out at 2.5%, because the rate it reduced was lower. From 2026 the cost of an intangible asset with no fixed useful life is deducted over 20 years; intangible assets put into a company for shares count at no more than their market value, with no deduction at all if that value is not shown to the Tax Commissioner's satisfaction; and the extra 20% deduction for R&D spending in 2025 to 2030 is not given for an asset that has had the IP box in any year.

Income Tax (Amending) (No. 4) Law 244(I)/2025, Official Gazette No. 5070