Where dividends are received from abroad, any overseas tax withheld is given as a tax credit against the tax resulting in Cyprus.
Dividend income accrued or arising to any person (company or individual) which is resident in Cyprus for income tax purposes, whether the said income derives from sources in Cyprus or outside Cyprus, is exempt from income tax, in accordance with section 8(20) of the Income Tax Law.
A company is considered to be resident in Cyprus for tax purposes, if its management and control are exercised in Cyprus, whereas an individual is so resident if he/she resided therein for a period or more which in aggregate exceed 183 days in the same tax year.
Subject to certain exceptions/conditions, dividend income is subject to special contribution for the defence only if it is received or is deemed to be received by any person (company or individual) which is resident in Cyprus for income tax purposes.
Thus it follows that no withholding tax applies to payments of dividends to non-residents, whether the recipient is a body corporate or an individual.
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