Cyprus Cuts Defence Contribution On Dividends And Abolishes It On Rents

Cyprus has reduced the general Special Defence Contribution (SDC) rate on dividends received by tax resident and domiciled individuals from 17% to 5%, and abolished SDC on rental income from 1 January 2026. The reform retains a specific transitional rule for distributions of older profits by Cyprus tax resident companies. GHS contributions must be considered separately.

Law 245(I)/2025 amended the Special Contribution for the Defence Law, 117(I)/2002. For Cyprus-company dividends, the source of the profits and the date of receipt can determine whether the transitional 17% rate applies. Foreign-company dividends received from 2026 are subject to the general 5% rate for individuals within the SDC charge. The former rental SDC, calculated at 3% on 75% of gross rent, has ended; that does not remove income tax or other applicable charges.