By Nexora Cyprus editorial team · General information — seek advice for your circumstances
Quick Summary
For a non-domiciled Cyprus tax resident, the total tax cost of extracting profits from a Cyprus company is approximately 15% (CIT at company level) plus 0% SDC at personal level — giving an all-in rate of approximately 15% before any deductions. Domiciled individuals pay 5% SDC on dividends from 2026 (reduced from 17%). SDC on passive interest income was reduced from 30% to 17% for domiciled individuals from 1 January 2024. The 2026 reform also introduced a transitional rule: profits earned through 31 December 2025 keep the 17% SDC rate when distributed, until 31 December 2031 — model the blended rate with our [Transitional Dividend SDC Calculator](/calculators/transitional-dividend).
Extracting profits from a Cyprus company involves two potential tax layers: (1) Cyprus corporate income tax on the profits (15% from 2026); and (2) Special Defence Contribution (SDC) on the dividend when distributed to an individual shareholder who is both tax-resident and domiciled in Cyprus.
For corporate shareholders, there is no Cyprus withholding tax on outbound dividends — the chain of holding companies can be structured to minimise total tax drag from company level all the way to the ultimate beneficial owner.
SDC on Dividends — 2026 Rates by Shareholder Type
| Shareholder Category | SDC Rate | Notes |
|---|---|---|
| Cyprus resident, Cyprus domiciled individual | 5% | Reduced from 17% — effective 1 Jan 2026 |
| Cyprus resident, non-domiciled individual | 0% | Exempt — 17-year non-dom period |
| Non-Cyprus resident individual | 0% | No SDC on dividends to non-residents |
| Cyprus company | 0% | No SDC on inter-company dividends |
| Foreign company | 0% | No WHT on dividends to corporate shareholders |
Individuals who qualify as non-domiciled Cyprus tax residents pay zero SDC on dividends and interest for up to 17 years from first becoming Cyprus tax-resident (or for 17 consecutive years of Cyprus residency if the 17/20-year domicile rule is used).
This makes the non-dom route extremely attractive for founders and high-net-worth individuals who relocate to Cyprus. A founder holding 100% of a Cyprus company could receive all company profits as dividends, with zero SDC, paying only the 15% CIT at the company level.
For a non-dom individual holding a Cyprus operating company, the optimal extraction strategy is typically:
SDC Rate on Interest — Updated January 2024
SDC on passive interest income received by Cyprus-domiciled tax residents was reduced from 30% to 17% with effect from 1 January 2024. Non-domiciled Cyprus tax residents remain fully exempt from SDC on interest income (0%). From 2026, if a domiciled individual loses non-dom status after 17 years, the applicable SDC on dividends is 5% (not 17% as previously).
Cyprus Tax Department documents and Cyprus Tax Reform 2026 material publish the controlling material for this topic. Check the current law, form, circular or portal instructions before acting; this article is general information and the live official material prevails.
Related Guides
Disclaimer: This article is for informational purposes only and does not constitute legal, tax, or financial advice. Tax laws change frequently. Consult a qualified Cyprus adviser for guidance specific to your situation. The information on this page is general guidance only and does not constitute legal, tax, accounting, immigration or financial advice. Specific advice should be obtained based on the facts of each case.
— References linked in this article
Read each reference alongside the claim it accompanies and check current amendments before relying on it. General information — seek advice for your circumstances.
Our experts are ready to answer your questions.
Initial discussion · No obligation