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GL-S-04
Glossary · Cyprus PR
Special defence contribution in Cyprus - who pays after the 2026 reform
Special Defence Contribution - a separate tax on dividends and interest
01 / In 30 seconds
The short answer
- What it is
- Special Defence Contribution - a separate tax on dividends and interest
- Who pays
- Cyprus tax residents who are domiciled in Cyprus
- What changed
- From 2026 the contribution on rent is abolished
- Non-dom
- A resident without Cyprus domicile pays no contribution on dividends and interest for 17 years
02 / In plain words
What Special defence contribution means
The special defence contribution (SDC, in Greek Έκτακτη Εισφορά για την Άμυνα) is a separate Cyprus tax on passive income, mainly dividends and interest. It works separately from income tax.
It is paid by Cyprus tax residents who are domiciled in Cyprus. A foreigner who becomes tax resident usually has non-dom status and pays no contribution on dividends and interest for 17 years.
From 2026 the contribution on rental income was abolished as part of the tax reform. We check post-reform rates and details on dividends and interest with an accountant for your case.
A simple example
A client moved to Cyprus, became tax resident with non-dom status and receives dividends from their company. They pay no defence contribution on dividends, but do pay GESY at 2.65%.
When the defence contribution matters
- Moving to Cyprus and tax residency
- Dividends from your own company
- Interest on deposits
- Renting out property
- Planning non-dom status
03 / What it covers
Who pays and on what
Pay
- Cyprus residents
- Domiciled in Cyprus
- On dividends and interest
Do not pay
- Non-doms for 17 years
- Non-residents
- On rent from 2026
Rent after the reform
- Income tax on 80%
- GESY 2.65% for residents
- Defence contribution abolished
What to check
- Residency status
- Domicile
- Source of income
04 / How it works
How to tell if you pay the contribution
Residency
183 days or the 60-day rule.
Domicile
Cyprus domicile or non-dom.
Type of income
Dividends, interest or rent.
Calculation
An accountant works out your taxes.
Tax return
Filed with the Tax Department on time.
05 / Key facts
What matters
01In short
Tax on passive income
The defence contribution is charged on dividends and interest separately from income tax.
02Rent
Abolished from 2026
Rent now carries income tax on 80% of it and GESY 2.65% for residents.
03Non-dom
0% for 17 years
A resident without Cyprus domicile pays no contribution on dividends and interest. Extension - twice for 5 years, €250,000 each.
04PR
No effect on its own
The contribution concerns tax residents. PR does not make you one.
Common mistakes
Thinking the contribution on rent still applies
It was abolished from 2026.
Thinking PR brings Cyprus taxes
Taxes depend on tax residency, not on PR.
Not checking domicile
Non-dom status means 0% contribution for 17 years. Check it before moving.
06 / Expert advice
How to prepare in advance
If you plan to move and receive dividends from your own company, tell us early: with an accountant we will check residency and non-dom status.
What we do for you. With an accountant we check your residency, domicile and sources of income and explain which taxes apply after you move.
Dmitry NagyTax consultant, international taxation and compliance (ex-Big4)
07 / Questions
Frequently asked questions
A separate tax on dividends and interest for residents domiciled in Cyprus.
Not from 2026, the contribution on rent was abolished.
Not for 17 years if they are a tax resident with non-dom status.
No. It depends on tax residency and domicile.
Income tax on 80% of it, plus GESY 2.65% for residents.
Yes, twice for 5 years, €250,000 each.
Cyprus PR glossary
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