Cyprus Company Deemed Dividend Distribution

NOTE: Deemed Dividend Tax Applies to Cyprus Tax Resident Shareholders Only. If the shareholder of a Cyprus Company is Tax Resident in a country other than Cyprus then there is no tax on dividends which are always tax free in such cases (as far a Cyprus Tax is concerned).

The Deemed Dividend Tax is the Special Defence Tax on the Net Profits of a Company when they are not distributed. When such profits are been distributed the tax is simply called dividend tax (and it is the Special Defence Tax on the Declared Dividends).

In this short video we explain how the after tax profits are taxed by the Cyprus Income Office when;

a) Shareholders of a Company are Cyprus Tax Residents; and

b) Shareholders do not declare any dividends for that specific year.

We also illustrate with a simple example how the Cyprus Income Tax Office gives a 30% "discount" to profitable companies when taxing the dividends (always to Cyprus Tax Residents) as long as they do not take them 2 years after the year end.

This 30% "discount" is very important and cash flow permits should be taken by all shareholders.

IMPORTANT NOTE: In the event of actual distribution, special defence tax must also be paid on the remaining 30%.

Watch the video!

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[BoombasticGA]

This is misleading because is not a "discount". The pending 30% still is taxed when the profit is distributed after 2 years.