Maintain maximum capital efficiency. Updated for 2026 with the latest defensive withholding rules for low-tax jurisdictions and the new 5% LTJ dividend rate.
Cyprus’s primary competitive advantage is its broad 0% Withholding Tax on outbound dividends, interest, and most royalties.
Cyprus does not levy WHT on payments to non-residents (corporate or individual) unless the recipient is an “Associated Entity” in a targeted jurisdiction.
| Payment Type | Standard Rate | Defensive WHT (EU Blacklist) | Defensive WHT (Low-Tax) |
| Dividends | 0% | 17% | 5% (New 2026 Reform) |
| Interest | 0% | 17% | 0% (Deduction Denied) |
| Royalties (Used outside CY) | 0% | 10% | 0% (Deduction Denied) |
| Royalties (Used inside CY) | 10% | 10% | 10% |
| Technical Fees | 0% | 0% | 0% |
As of January 1, 2026, Cyprus has expanded its defensive net. An LTJ (Low-Tax Jurisdiction) is defined as any jurisdiction with a corporate tax rate lower than 50% of the Cyprus rate.
The 2026 reform includes a powerful General Anti-Abuse Rule (GAAR). The Tax Department will look through “shell” companies in white-listed countries (like the UK or Malta) if their primary purpose is to bypass WHT on payments eventually destined for a blacklisted country.
To maintain your 0% WHT status, your structure must demonstrate:
No. Cyprus does not levy withholding tax on dividends paid to non-resident individuals, regardless of their country of residence. The new 17% defensive tax only applies to “Associated Companies” in blacklisted or low-tax jurisdictions.
Royalties are 0% if the IP is used outside Cyprus. If the IP is used inside Cyprus, a 10% WHT applies (which can often be reduced to 0% via Double Tax Treaties).
From January 1, 2026, you will likely face a 17% WHT on dividends and a denial of tax deductions for any interest or royalty payments made to that company.
The list follows the official EU List of Non-Cooperative Jurisdictions. It is updated twice a year. Common entries often include jurisdictions like American Samoa, Fiji, Panama, and the Russian Federation.
In most cases, No. The 2026 domestic defensive laws are designed to override treaty benefits where the recipient is in a blacklisted jurisdiction. However, for “Low-Tax” (non-blacklisted) countries, certain DTTs may still offer protection—we provide a case-by-case review for this.
