We would like to remind you that the deadline for the payment of the Special Defence Contribution tax on the Deemed Dividend Distribution is the 31st of January 2019.

When do the provisions of the Deemed Dividend Distribution scheme apply

The Deemed Dividend Distribution is calculated on the profits of companies that are tax residents in Cyprus and are attributable to individuals who are tax residents and domiciled in Cyprus. The Deemed Dividend Distribution does not apply when the profits of the Cyprus tax resident company are directly or indirectly attributable to individuals who are either not tax residents in Cyprus or who are tax residents in Cyprus but are not domiciled in Cyprus.

How is the Deemed Dividend Distribution calculated

The Deemed Dividend Distribution is calculated when a company has not distributed at least 70% of its profits (as calculated for deemed distribution purposes) within two years from the end of the financial year in which the profits were generated. In such a cases, such profits are subject to a 17% Special Defence Contribution.

Deemed Dividend Distribution for 2016 profits

By 31 December 2018 the companies must distribute at least 70% of the profits of 2016 and pay the relevant Special Defence Contribution through JCC smart (category 603). Otherwise, the non-distributed profits (up to required  limit of 70%) will be deemed to be distributed and will be subject to Special Defence Contribution of 17%, payable through JCC smart (category 623) by 31 January 2019.

How we can help

We are at your disposal to assist you with the relevant calculations as well as by completing and submitting the relevant tax returns.

For more information contact us at [email protected] .