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Special contribution for defence

Imposition
Special contribution for defence is imposed on income earned by Cyprus tax residents. Non-tax residents are exempt from special contribution for defence.

Rates	Individuals	Legal entities	Note
Dividend income from Cyprus resident companies	15	-	1
Dividend income from non-Cyprus resident companies	15	-	2
Interest income arising from the ordinary activities or closely related to the ordinary activities of the business	-	-
Interest from investments in government bonds	3	10
Interest from investments in government saving certificates	3	10
Interest from deposits with the Housing Finance Corporation	3	10
Interest earned by provident fund	3	10
Rental income (reduced by 25%)	3	3	3
Profits of semi-government organisations	-	3

Notes:
1.	Individuals whose total income including interest does not exceed €11.960,21 are entitled to a refund of 7%
2.	Dividend income from abroad is exempt from defence fund contribution provided that the company receiving the dividend owns at least 1% of the company paying the dividend. This exemption does not apply if: 1. more than 50% of the paying company’s activities result directly or indirectly in investment income and 2. the foreign tax is significantly lower than the tax rate payable in Cyprus. When the exemption does not apply, the dividend income is subject to special contribution for defence at the rate of 15%.
3.	Special contribution for defence on rental income is payable in June & December each year