Cyprus holding company: dividends, structure and setup

A Cyprus holding company can own shares in companies abroad. Dividends it receives are generally exempt, and Cyprus usually charges no withholding tax on dividends paid to non-residents. The exceptions apply to related recipients (a link of more than 50%) and not to dividends on listed shares: 17% on dividends paid to companies in EU-blacklisted jurisdictions and, since 1 January 2026, 5% on dividends to companies in low-tax jurisdictions. Real substance matters for treaty and anti-abuse rules abroad.

Dividends receivedGenerally exempt
Cyprus withholding on dividendsNone in most cases; 5% or 17% for some related recipients
SubstanceFor treaties and anti-abuse rules
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Limassol seafront towers and marina on a sunny morningChecked 29 October 2026

Steps and timeline

  1. 1

    Structure review

    Group, treaties, anti-abuse rules.

    1–2 weeks
  2. 2

    Formation and bank

    We register the company, appoint the directors and apply for the bank account; the bank decides.

    2–6 weeks
  3. 3

    Substance

    Directors and decisions in Cyprus.

    ongoing

Documents

For the structure and the bank

0 of 6 ready

Official forms: Name approval application (no form number) · how to fill it in, HE1 (ΗΕ1) · how to fill it in, HE3 (ΗΕ3) · how to fill it in

The exact list depends on your situation; we confirm it before filing.

Who does what

What you do

  • Share your situation and goals
  • Collect documents from home
  • Agree the scope of work in writing

What we do

  • Check the requirements for your case
  • Prepare the documents and file the application
  • Follow up until the decision

Your coordinator

  • Plans the work and next steps
  • Keeps one timeline for everything
  • Reminds you of renewals and deadlines

Common mistakes

  • A holding company with no decisions in Cyprus: the subsidiary's country can refuse the Directive or treaty rate
  • Owning a low-taxed investment company, which brings the 5% defence contribution
  • Paying dividends on to a related company in a low-tax or EU-blacklisted country
  • Forgetting your home country's rules on foreign companies you control
  • Selling the subsidiary before the minimum holding period abroad

What affects the cost

The price depends on your situation. We explain the scope and expected costs before work begins.

Number of subsidiaries and countriesDividend and exit plansSubstance neededHome-country rules on foreign companies

Questions

Is a holding company right for me?

It depends on your group and home-country rules; we check them for your case.

How are dividends taxed in a Cyprus holding company?

Example: your Cyprus company owns 100% of a German GmbH, held for more than a year. The GmbH pays a €1,000,000 dividend. Under the EU Parent-Subsidiary Directive, Germany withholds nothing on request, if the Cyprus company has real substance. In Cyprus the dividend is exempt from income tax, and no defence contribution is due on a trading subsidiary's dividend. The company receives the full €1,000,000.

When does the 5% defence contribution on foreign dividends apply?

Only when both tests are met. The paying company earns more than half of its income from investments. And the foreign tax on its profit is less than half of the Cyprus tax. Dividends from trading subsidiaries, or from normally taxed ones, stay free.

Is a gain on selling a subsidiary taxed in Cyprus?

No, gains on shares are exempt from income tax. The exception is a company that owns Cyprus property: then capital gains tax applies to the part of the gain that comes from that property.

What do I pay when the holding company pays me?

If you are not Cyprus tax resident, Cyprus usually withholds nothing. If you are Cyprus tax resident and not domiciled here, there is no defence contribution. GESY of 2.65% still applies, on income up to €180,000 a year. Your home country may tax the dividend under its own rules.

Sources

Figures checked 29 October 2026. Rules change: we confirm them for your case before you act.

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