Cyprus Investment Income Guide 2026
Cyprus offers highly favourable tax treatment for investment income. Dividends and interest received by Cypriot companies and non-dom individuals are subject to 0% tax. The Special Defence Contribution (SDC) applies at 17% on dividends and 30% on interest for Cyprus-domiciled residents, but non-dom individuals are fully exempt.
Investment income taxation is a key advantage of the Cyprus system. The combination of 0% withholding tax on outbound payments, participation exemption for corporate dividends, and non-dom exemption for individuals makes Cyprus a premier jurisdiction for investment holding. For related guidance, see our Capital Gains Guide → and Cross-Border Guide →.
Dividend Taxation
- Companies: Dividends received by a Cyprus company from abroad are exempt from CIT under the participation exemption (0.5% special defence contribution applies on gross dividends for Cyprus-domiciled shareholders receiving dividends from Cyprus companies)
- Individuals (domiciled): SDC of 17% on dividends received; no further income tax
- Non-dom individuals: 0% on dividends worldwide
- Withholding tax: 0% on dividends paid to non-residents
Interest Taxation
- Companies: Interest income is taxed at CIT 12.5% (with deductions for related expenses)
- Individuals (domiciled): SDC of 30% on interest income; exempt from further income tax
- Non-dom individuals: 0% on interest worldwide
- Withholding tax: 0% on interest paid to non-residents
Participation Exemption for Companies
Cyprus has a full participation exemption on dividends and capital gains from qualifying shareholdings. A Cyprus company is exempt from CIT on dividends received from a subsidiary if the company holds at least 5% of the subsidiary's shares or the acquisition cost is at least EUR 20,000. There is no minimum holding period. The exemption also covers capital gains from the disposal of such shares.
Royalty Taxation
- Royalties received by Cyprus companies are taxed at CIT 12.5% (or 2.5% effective under IP Box)
- Withholding tax on royalties paid to non-residents: 0% in most cases (10% on certain types if not covered by treaty or EU directive)
- Royalties paid to EU residents benefit from the Interest and Royalties Directive (0% WHT)