Dividends, the defence contribution and non-dom: what changed in 2026

01What changed on 1 January 2026

The House of Representatives adopted this on 22 December 2025; the reform was published in the Official Gazette of the Republic on 31 December 2025. The rise in corporate tax follows the international minimum rate.

On balance the burden shifts: the company pays more, the distribution to the shareholder considerably less.

02The defence contribution follows the profit year, not the payment year

This is where people get it wrong. The lower rate applies to profits earned from 2026 onwards — not to distributions paid from 2026 onwards.

A distribution made in 2026 out of a 2024 profit still carries 17%. Applying the new rate because the transfer date falls in the new year is simply wrong.

In practice that means you have to be able to say, for every distribution, which profit year it came out of. That is a question for the retained earnings, not for the bank statement.

03The deemed dividend distribution is gone

Until now part of the profit could be treated as distributed even where nothing had been paid — and the defence contribution fell on it. The reform removed that rule.

For a shareholder who leaves profits inside the company this is the second large relief in this reform — and it draws less attention than the first, because nothing starts, something stops.

04Non-dom: the contribution falls away entirely

Someone who is not domiciled in Cyprus for defence contribution purposes does not pay it on dividends — neither the old rate nor the new one. You are domiciled if you have a domicile of origin in Cyprus, or if you have been tax resident in Cyprus for at least seventeen of the last twenty tax years.

This is a window that closes by itself. Someone who moves in has it for about seventeen years — and has to know for themselves when it shuts.

After that there is a way out: under an alternative method the exemption can be extended by two further five-year periods, at €250,000 per period.

The exemption covers the defence contribution, not GHS. Dividends still carry the GHS contribution — which one is set out in the guide to contributions.

05How well this is evidenced

• Corporate income tax, the abolition of the deemed distribution, and the defence contribution rates: officially evidenced, with the Gazette date.
• The non-dom rule and the alternative method: officially evidenced, Tax Department of the Ministry of Finance.
• The personal tax-free amount and the bands above it: advisory sources only. The official explanatory guide to the reform exists so far only in Greek.

Every figure on this page appears below with its source and the day we saw it there. This page is orientation, not tax advice — a distribution involves amounts where an accountant pays for themselves.