Defense tax in Cyprus

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Cyprus has this troublesome defense tax deducted from the passive income of tax residents. Essentially, until January 31st, a tax declaration on dividend distribution from the fiscal year 2013 has to be submitted. In case a Cyprus company fails to distribute dividends from 70% of its profit within 2 years, the dividends are subject to what’s known as conditional distribution, which is imposed with the aforementioned defense tax. However, there is a “domicile” tax status, which implies exemption from defense tax even for Cyprus residents.