Defence Fund Contribution

The Defence Fund Special Contribution is imposed on income accrued from sources in Cyprus received by any person resident in Cyprus.

For more detailed information about Defence Fund Contribution, please either scroll up or down this page (quicker) or click below to go to the relevant section:

Rates; | Refund; | Foreign Tax Allowance; | Deemed Distribution; | Domiciled in Cyprus;

Rates
Defence Fund Contribution – Rates
Rates Details Individuals % Other Persons %
Interest [except interest accrued to any person
from the ordinary carrying on of his business, which is exempt); interest received by a Group Finance Company from its group company members (>50% directly or indirectly or exercise of control) is deemed as accrued from the ordinary carrying on of its business and therefore exempt]
30 30
Dividends received or deemed to be received from a company resident in Cyprus 17
Dividends received from abroad 17 17(1)
Interest from savings certificates and development stocks issued by the Government 3 30
Interest accrued from the provident fund 3
Profits of a Public Corporate Body 3
Rents (reduced by 25% instead of actual expenses) 3 3

(1) In the case that the dividends are received from a company where the shareholders hold directly at least 1% of the share capital, then the dividends are exempt from the payment of special contribution.

This exception does not apply if:

  • The company paying the dividend engages more than 50% in activities that lead to investment income, and
  • The foreign tax burden on the income of the company paying the dividend is substantially lower than the tax burden of the company that receives the dividend.

For more detailed information about Defence Fund Contribution, please either scroll up or down this page (quicker) or click below to go to the relevant section:

Rates; | Refund; | Foreign Tax Allowance; | Deemed Distribution; | Domiciled in Cyprus;

Refund

An individual, – whose annual income, including interest – does not exceed the amount of €12.000, has the right to a refund of the tax withheld on interest in excess of the amount corresponding to 3%.

For more detailed information about Defence Fund Contribution, please either scroll up or down this page (quicker) or click below to go to the relevant section:

Rates; | Refund; | Foreign Tax Allowance; | Deemed Distribution; | Domiciled in Cyprus;

Foreign Tax Allowance

In case that foreign tax was paid on income subject to special contribution, this can be given as an allowance against the special contribution payable on the income, irrespective of the existence of a double taxation relief with the foreign country.
For more detailed information about Defence Fund Contribution, please either scroll up or down this page (quicker) or click below to go to the relevant section:

Rates; | Refund; | Foreign Tax Allowance; | Deemed Distribution; | Domiciled in Cyprus;

Deemed Distribution

A company resident in Cyprus has to pay 17% special contribution to the defence fund based on a deemed distribution of 70% of the accounting profits after taxation and before set-off of losses brought forward from previous years, after taking into consideration any dividends paid within the two years. The deemed distribution takes place two years after the end of the year of assessment.
This deemed distribution applies only when the shareholders of the company are tax residents of Cyprus and Cyprus domiciled individuals. (Non – Resident/Domiciled Beneficial Shareholders are exempt).

For more detailed information about Defence Fund Contribution, please either scroll up or down this page (quicker) or click below to go to the relevant section:

Rates; | Refund; | Foreign Tax Allowance; | Deemed Distribution; | Domiciled in Cyprus;

Domiciled in Cyprus

An individual is considered to be domiciled in Cyprus for Special defense contribution purposes, if such an individual has a domicile of origin as defined in the Wills and Succession Law.

The following individuals are not considered to be domiciled in Cyprus:

  • An individual who has obtained and maintained a domicile of choice outside Cyprus in accordance with the Wills and Succession Law, provided that such an individual has not been a tax resident of Cyprus for a period of 20 consecutive years preceding the tax year, or
  • An individual who has not been a tax resident of Cyprus for a period of 20 consecutive years prior to 16 of July 2015

Rates; | Refund; | Foreign Tax Allowance; | Deemed Distribution; | Domiciled in Cyprus;

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