Cyprus Companies’ Deemed Dividend Distribution and General Health System contributions – December 2020 – For Cypriot Shareholders
Cyprus Companies should be aware of the deemed distribution of the Special Contribution for the Defence and the General Health System Contribution on profits and dividends.
In accordance with the Cyprus Tax Law, Cyprus Companies are deemed to have distributed in the form of dividends, 70% of their accounting profits after deducting the Cyprus taxes, from the end of the second year of the year when the profits have been related. Special contribution for the defense at 17% for the tax year 2020 will be payable on such deemed dividends to the extent that the shareholders (companies and individuals) are Cyprus tax residents (Non-Cypriots who have moved their tax domicile to Cyprus are exempt. The amount of deemed distribution is reduced by any actual dividends paid out of the profits of the relevant year at any time. In this respect, profits of the year 2018 are subject to a deemed distribution on 31 December 2020. This special contribution for defense is payable by a Cyprus Company on behalf of its shareholders.
Similarly, Cyprus Companies are subject to contribution to the General Health System which amounts to 1.70% – Phase 1 covering only outpatient care increased to 2.65% – Phase 2 covering both outpatient and inpatient care. The contribution to the General Health System is paid by the Cyprus Company on behalf of all Cyprus Company shareholders – European citizens who work or have acquired the right of permanent residence in Cyprus
Cyprus Companies which declare and pay contributions after the due dates, additional fines, and penalties will be imposed.
Portal for payment of contributions
The payment of contributions can be settled through the JCCSmart website or Cyprus Tax Department portal following a similar procedure as the provisional tax payment by following the links below:
https://www.jccsmart.com/
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