Cyprus Dividend and Interest Tax: SDC, GHS and Non-Dom Rates for Residents and Non-Residents

A Cyprus tax resident who is also domiciled in Cyprus pays Special Defence Contribution (SDC) of 5% on dividends from profits of 2026 onwards, 17% on dividends from Cyprus-company profits of 2025 and earlier that are received by 31 December 2031, and 17% on bank interest (3% on certain bonds). A resident who is not domiciled (a non-dom) and a non-resident pay no SDC. Every resident, domiciled or not, also pays the 2.65% GHS health contribution on dividends and interest, within one annual cap of €180,000 of income, which makes the maximum €4,770. Dividends are exempt from income tax, and Cyprus charges no withholding tax on dividends paid to non-resident individuals. For a domiciled resident with €60,000 of dividends from 2026 profits and €6,000 of bank interest the total is €5,769, or 8.7%; for a non-dom it is €1,749, or 2.65% (sources read on 9 November 2026).

Cyprus dividend tax at a glance: rates for domiciled, non-dom and non-resident individuals

Three statuses decide what an individual pays. A domiciled resident is tax resident in Cyprus and also domiciled for the purposes of the SDC Law. A non-dom resident is tax resident but not domiciled, which is the normal position of a foreigner for the first 17 years. A non-resident is not tax resident in Cyprus. The table shows each income type under each status.

Dividends and interest received by individuals are exempt from income tax, and where SDC applies it is charged in place of income tax (PwC Worldwide Tax Summaries, last reviewed 4 August 2026). The rest of this guide explains each column, with the sources, and works through three examples. The income tax bands, salary contributions and filing rules are in Cyprus tax for individuals, and the full list of 2026 changes is in the Cyprus tax reform guide.

Special defence contribution (SDC) on dividends and interest: who pays it

The SDC is charged under the Special Contribution for the Defence of the Republic Law, 117(I)/2002, as amended. The Tax Department defines a resident of the Republic for this law as an individual who is a Cyprus tax resident for income tax purposes and who also has a domicile in Cyprus. Tax residence comes from the 183-day rule or the 60-day rule, which tax residency in Cyprus sets out. Domicile is the second test, covered below.

For a person who meets both tests the SDC covers dividends and interest from every source. KPMG Cyprus (April 2026) writes that these are taxed at 5% and 17% respectively regardless of the country of origin, in Cyprus or abroad. The contribution has no upper ceiling in the sources I read: it is a flat percentage of the dividend or interest.

When a Cyprus company pays the dividend, the company withholds the SDC and gives the shareholder a certificate that states the dividend, the SDC withheld and the year in which the profits were made (Tax Department presentation on the SDC amendment, March 2026). Interest paid by a Cyprus bank is also taxed at source. For dividends and interest from abroad nothing is withheld in Cyprus, so the individual declares them in the income tax return and pays the SDC.

What changed in SDC on dividends and interest from 1 January 2026

The Special Defence Contribution (Amendment) (No. 4) Law of 2025 took effect on 1 January 2026. The Tax Department's slides and PwC give these changes for dividends and interest.

The Tax Department's own example shows how the two dividend rates run side by side. A person who receives €1,000 in 2027 from profits of 2025 and €1,000 from profits of 2026 pays 17% on the first and 5% on the second. A shareholder who receives dividends from a Cyprus company should therefore ask which profit year each payment comes from, because the year decides the rate.

The Law also gained a general anti-abuse rule for the SDC, modelled on the one in the Income Tax Law, and an anti-abuse clause for dividends that pass through an interposed company in which the shareholder holds more than 50%. The slides say the Commissioner may charge the SDC on the company or on the individuals where the interposition has the main purpose of avoiding, reducing or deferring it.

GHS contribution on dividends and interest: 2.65% and the €180,000 cap

The GHS contribution funds the national health system. It is a separate charge from the SDC and it depends on residence and income; domicile plays no part. PwC lists a rate of 2.65% for persons earning interest, dividends and other income, and the Tax Department's return guide states that dividends and interest are subject to the SDC and the GHS contribution. A non-dom therefore pays GHS on dividends and interest while paying no SDC.

The cap works on the total of all income types together. The Tax Department's 2025 return guide says the contribution is payable on annual income up to €180,000, that incomes are added up in the order shown in the GHS calculation table until the €180,000 is reached, and that the Department refunds any amount paid above it. At 2.65% the maximum is €4,770 a year. The table shows the contribution at several levels of total income.

Because the cap counts all income together, a person with a salary also uses up room. An employee who earns €150,000 already pays 2.65% × €150,000 = €3,975 through payroll, and only €30,000 of room is left under the cap. The same person's €66,000 of dividends and interest then adds 2.65% × €30,000 = €795, against €1,749 without the cap. The cap saves €954 here, and the Department refunds it after the return is filed.

Two practical points come from the return guide. GHS on interest and dividends is collected under one payment code (0316) once the return is filed, and the return has a column for GHS already withheld at source. A person insured in another country of the European Economic Area or Switzerland can declare an S1, A1 or Ministry of Health exemption document in the return; the guide does not say how this works for each type of income, so a person in that position should ask the Tax Department before assuming dividends and interest are covered. For how the health system itself works for a newcomer, see GESY in Cyprus explained.

How non-dom status removes SDC on dividends and interest

The SDC Law applies to residents who are domiciled. A tax resident without a domicile is outside it, so the SDC on dividends and interest is nil for that person, whether the income comes from Cyprus or abroad (PwC; KPMG Cyprus, April 2026). Income tax on these items is exempt anyway, so a non-dom resident pays no Cyprus income tax and no SDC on dividends and interest, only the GHS contribution.

A foreigner has no domicile of origin in Cyprus. Under the Tax Department's Tax Residency/Domicility page, a person is deemed to acquire a Cyprus domicile after being a Cyprus tax resident for at least 17 of the 20 years before the tax year. A newcomer who becomes tax resident in 2026 and stays has 17 resident years by the end of 2042, so the first tax year as domiciled is 2043. The year-by-year counting, the exceptions for people with a Cyprus domicile of origin, and the declaration forms are explained in the Cyprus non-dom status guide, which this guide does not repeat.

Two documents matter in practice. Form T.D.38 is the declaration of an individual for exemption as non-domiciled, filed with the district office in the first year in which dividends or interest arise. Form T.D.624/NP is a declaration addressed to the paying institution, so that a bank or company does not deduct the SDC at source. The Tax Department's page lists the 2016 and 2017 editions of these forms; ask the bank which version it accepts.

Since 1 January 2026 a person who has no Cyprus domicile of origin and has become deemed domiciled can apply for the alternative method in Article 3D of the Law: €50,000 a year for five years, paid as €250,000 after the Commissioner approves the application, which covers the SDC on dividends and interest from Cyprus and abroad. The application form is TD 631, submitted through the Tax For All portal by 30 June of the first year of the period, and it may be filed up to two years before the person becomes domiciled. The Tax Department's slide states that the €250,000 is not offset against other liabilities, is not refunded and is not reduced by foreign tax. GHS stays payable. The break-even arithmetic is in the non-dom guide.

Dividend withholding tax in Cyprus: nil for non-resident individuals

Cyprus charges no withholding tax on dividends paid to non-residents of Cyprus. PwC's corporate tax summary (last reviewed 4 August 2026) states this for dividends, interest and royalties on rights not used in Cyprus, and gives a nil rate in the non-treaty line of its table. The exceptions it lists concern companies: 17% on dividends paid to companies in jurisdictions on the EU list of non-cooperative jurisdictions, and from 1 January 2026 a 5% rate on dividends paid to related companies in low-tax jurisdictions, with exemptions for quoted companies under conditions. The Tax Department's slide on Article 3(1)(d) describes the same two cases for non-resident companies. None of them applies to an individual shareholder. For UK dividends and the convention, see the UK-Cyprus double tax treaty.

A non-resident individual is also outside the SDC for all income, from Cyprus or abroad (PwC), and Cyprus taxes non-residents only on certain income from Cyprus sources. Dividends are exempt from income tax for individuals. A non-resident shareholder in a Cyprus company who receives a dividend therefore bears no Cyprus tax on the dividend according to these sources; what the home country charges depends on its own law and on any double tax treaty. Where Cyprus tax was withheld and a treaty provides relief, the Tax Department accepts form T.D.156 from non-residents to claim an exemption or a refund, sent to the Nicosia District Office.

The one point I could not confirm is the GHS contribution for non-residents. The return guide asks tax residents to declare dividends and interest for the SDC and GHS, and the Tax Department's SDC slides say payers withhold on the dividends they pay, but no official page I read states whether GHS applies to dividends or interest paid to a non-resident individual. Confirm this with the Tax Department before a distribution to a non-resident.

Bank interest tax in Cyprus: SDC at source, bonds and the €12,000 case

Interest received by an individual is exempt from income tax and falls under the SDC and the GHS contribution. The Tax Department's return guide lists the rates by source. Interest from bank and co-operative deposits and from non-government bonds is charged SDC at 17%, interest from securities and government bonds at 3%, and interest from loans and from outside the Republic at 17% with no SDC withheld at source. The Cypriot bank deducts the contribution when it credits deposit interest, and the Tax Department publishes a guide for the withholding return of SDC and GHS on interest.

Interest from a foreign bank has no Cyprus payer, so nothing is withheld. A domiciled resident declares it in the return, any foreign tax paid is offset against the SDC due on that interest up to the amount payable, and the SDC is a single payment by the filing deadline. A non-dom resident declares no SDC on it, and the Tax Department's guidance says to fill in form T.D.38 and clear the SDC lines. An account abroad also appears in the return with its country and account number, and Cyprus receives bank data from other countries under the Common Reporting Standard, as the guide on whether Cyprus is a tax haven explains.

A special case exists for a low total income. The 2025 return guide says the refund of SDC withheld on deposit interest is calculated only if the person's total income, including the interest, does not exceed €12,000. An older Tax Department note (2018) states that for such a person the SDC is 3% of the interest, and Philippou Law Firm (Legal 500, 3 November 2026) writes that the SDC withheld above 3% can be reclaimed. As an illustration, with €500 of deposit interest and total income of €10,000, the bank withholds 17% × €500 = €85, the final charge is 3% × €500 = €15 and the refund is €70. I found no 2026 Tax Department page on this rule, so a person near the limit should confirm that it applies unchanged. It concerns domiciled residents only, since a non-dom pays no SDC on interest.

Anyone opening a Cyprus account will be asked for tax identification details in every country of tax residence; the steps are in opening a bank account in Cyprus as a foreigner, and the number itself is covered in the Cyprus tax ID number guide.

Worked example: €60,000 of dividends and €6,000 of interest for a domiciled resident

Assumptions: the person is tax resident and domiciled in Cyprus, receives €60,000 of dividends from a Cyprus company out of profits of 2026, and €6,000 of interest on a Cyprus bank deposit, with no other income.

Two variants change the result. If the same €60,000 came from Cyprus-company profits of 2025 and was received before the end of 2031, the SDC on it is 17% × €60,000 = €10,200 and the total is €10,200 + €1,020 + €1,749 = €12,969, or 19.65%. If the person also earned a €150,000 salary, the GHS on the €66,000 of dividends and interest falls from €1,749 to €795 under the cap, as shown above, and the SDC does not change.

Worked example: the same dividends and interest for a non-dom resident

Same income, same year, but the person is tax resident and not domiciled, for instance a foreigner in the first years of residence. The SDC lines fall away and the GHS stays.

The saving from non-dom status is €5,769 − €1,749 = €4,020 a year, which is the SDC of €3,000 + €1,020. If the dividends came from Cyprus-company profits of 2025 and bore 17%, the domiciled total of €12,969 compares with €1,749 and the saving is €11,220. The GHS is the same under both statuses, so the status does not change the 2.65% or the €180,000 cap. A different set of figures, with €50,000 of dividends and €20,000 of interest, is worked in the non-dom guide.

Worked example: a foreign dividend with tax withheld abroad for a non-dom

Assumptions: a Cyprus-resident non-dom receives a gross dividend of €20,000 from a company in another country, which withholds 15% at source (this rate is an assumption; a treaty or the local law decides the real one). The question is what Cyprus does with the €3,000 withheld abroad.

The Tax Department states the credit rule on its page on avoiding double taxation: where tax was paid in the other state, the taxpayer may claim a credit equal to the lower of the tax actually paid and the Cyprus tax generated by that income. PwC gives the same rule for residents. In the 2025 return the foreign tax declared against a foreign dividend is transferred to the SDC calculation, offset against the SDC due on dividends from foreign companies and capped at the amount payable. The guide describes no offset against the GHS contribution.

For the non-dom the credit is capped at a Cyprus SDC of zero, so none of the €3,000 is credited or refunded in Cyprus, and the €530 of GHS is added. The total burden is €3,000 + €530 = €3,530, and the net dividend is €20,000 − €3,530 = €16,470. A domiciled resident reaches the same total because the €1,000 of SDC is absorbed by the credit while €2,000 of foreign tax is lost. If the source country withheld nothing, the domiciled resident would pay €1,000 of SDC plus €530 and the non-dom €530 only. The 2025 return guide is the latest edition I could read; the guide for the 2026 return, which is filed in 2027, may change the screens but the rule of the Law is the one above.

How SDC and GHS on dividends and interest are paid and declared

• Dividend from a Cyprus company to a domiciled resident: the company withholds the SDC (5% or 17%) and pays it to the Tax Commissioner by the end of the following month (Philippou Law Firm, 3 November 2026), and the shareholder keeps the company's certificate for the return.
• Interest on a Cyprus deposit: the bank withholds the SDC and the GHS contribution and the figures go into the return.
• Dividends and interest from abroad: no Cyprus payer withholds, so the SDC (domiciled residents) and the GHS contribution are calculated in the return, and the SDC is paid in one instalment by the filing deadline.
• GHS on interest and dividends: any amount shown in the return becomes a debt under payment code 0316, and a refund follows if total income went above €180,000.
• Non-dom resident: declare the exemption on form T.D.38 and give the paying institution form T.D.624/NP so no SDC is taken at source.

A return needs a tax identification code. The Tax Department's explanatory guide of 11 May 2026 says the return for the 2026 tax year is filed during 2027, with a deadline of 31 July 2027, and that a person with no gross income who is under 25 or over 70 need not file; a resident with dividends or interest has gross income and files. The Cyprus tax reform guide covers the new filing rules. Residence evidence for a foreign tax authority comes from the Cyprus tax residency certificate.

Cyprus dividend tax questions answered

Sources, all read on 9 November 2026. Cyprus Tax Department (gov.cy/mof-tax): presentation on the Special Defence Contribution (Amendment) (No. 4) Law of 2025 and the Capital Gains Tax (Amendment) (No. 3) Law, March 2026, in Greek, translation ours; the explanatory guide to the 2026 reform for individuals (11 May 2026 edition, Greek); the guide for completing the 2025 individual income tax return (English, June 2026 edition); the pages on Tax Residency/Domicility and on Avoiding double taxation/Foreign tax; the page on exemption from GeSY contribution; forms T.D.38 (2016), T.D.624/NP (2017) and TD 631 (2026); a Tax Department note on SDC on interest for income up to €12,000 (2018, Greek). PwC Worldwide Tax Summaries, Cyprus: individual sections on taxes on personal income, income determination, other taxes and foreign tax relief, and the corporate section on withholding taxes, all last reviewed 4 August 2026. KPMG Cyprus, Cyprus Tax Residency and Non-Dom rules, April 2026. Philippou Law Firm, Legal 500 market intelligence, 3 November 2026. Rates and examples are consistent with our guides on tax for individuals, the tax reform and non-dom status. Not confirmed on an official page: the Official Gazette text of the amended Law; a current Tax Department page on the GHS contribution on dividends and interest (an older Tax Department GHS guidance document could not be opened); whether GHS applies to dividends and interest paid to non-residents; the order in which income types are counted under the €180,000 cap; the guide for the 2026 tax return; and the €12,000 interest rule for 2026 beyond the law-firm note. The 15% foreign withholding rate in the third example is an assumption. This guide is general information and not tax advice; a licensed tax adviser should confirm your own position. Cyprus VIP Estates assists investors in choosing new developments; legal and immigration advice comes from licensed professionals.