Cyprus Companies should be aware of the deemed distribution provisions of the Special Contribution for the Defence Law on profits and dividends.
In accordance with the Cyprus Tax Law, Cyprus Companies are deemed to have distribute in the form of dividends, 70% of their accounting profits after deducting the Cyprus corporation tax, from the end of the second year of the year when the profits has been related. Special contribution for defence at 17% for the tax year 2014 will be payable on such deemed dividends to the extent that the shareholders (companies and individuals) are Cyprus tax residents. The amount of deemed distribution is reduced by any actual dividends paid out of the profits of the relevant year at any time. In this respect, profits of the year 2012 are subject to a deemed distribution on 31 December, 2014.This special contribution for defence is payable by a Cyprus Company on behalf of its shareholders.
Cyprus Companies are therefore required to declare actual dividends or declare deemed distribution on their 2012 profits on or before 31 December 2014 and pay the relevant special defence contribution by 31 January 2015. Cyprus Companies which declare and pay special contribution for defence after the due dates, additional fines and penalties will be imposed.
How we can help
We can help you to declare actual dividends or declare deemed distribution and pay the relevant special defence contribution for your Company.
For more information please contact our offices:
December 2014
PKF / ATCO Limited is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms. This publication is for information purposes only and should not be considered as professional advice.