Holding company in Cyprus: 2026 reform, dividend exemption and comparison with Andorra
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The short answer
Cyprus raised its corporate income tax rate to 15 % on 1 January 2026, up from 12.5 % previously. Qualifying dividends remain exempt; a 5 % withholding tax now targets dividends paid to low-tax jurisdictions.
In brief
Cyprus has long been the European hub for low rates. The reform that came into force on 1 January 2026 brought the rate closer to the average and tightened the treatment of payments to low-tax jurisdictions.
Taxation of the company
The corporate income tax rate is 15 %verified on 12/10/2026 since 1 January 2026. It was 12.5 %verified on 12/10/2026 until 2025. The 12.5 %verified on 12/10/2026 rate therefore applies only to earlier financial years. Qualifying dividends, including those from foreign subsidiaries, remain exempt.
The special defence contribution
The special defence contribution on dividends paid to a Cypriot resident who is domiciled there is 5 %verified on 12/10/2026 for profits made from 2026 (it was higher previously for earlier profits). Non-domiciled residents remain exempt. These rules concern only shareholders who are resident in Cyprus.
The new withholding tax on outgoing dividends
Since 2026, a 5 %verified on 12/10/2026 withholding tax applies to dividends paid by a Cypriot company to entities located in low-tax jurisdictions. Worth checking if the ultimate shareholder is in such a jurisdiction.
Who it suits
Cyprus suits groups with real substance on the island and international services activities, and shareholders who have become Cypriot residents. A shareholder who does not live there does not benefit from the non-domiciled regime.
Compared with Andorra
The general Andorran rate of 10 %verified on 09/10/2026 is lower than the Cypriot rate of 15 %verified on 12/10/2026, and the Andorran participation exemption follows a comparable logic. Cyprus is a member of the European Union and covered by its directives. See the holding company in Andorra.
For a French resident
What to check
The figures on this page come from foreign firms and administrations, verified on 12 October 2026: they are dated in our database and should be confirmed with local counsel before any decision. This page is a guide, not tax advice. Several sources differ on the detail of the research and development measures: we do not publish them.
The other countries
Comparison of countries for a holding company, holding company in Andorra, Luxembourg, Netherlands, Malta. Test the Andorran conditions in the holding company dividend simulator.
Work out your own case
Free simulators, built on the official values of this page.
- Andorra vs another European country: taxes, VAT and companiesQuantify the tax gap between Andorra and 33 European countries.Open
- Andorran holding simulator: exemption of dividends from shareholdingsDoes your dividend meet the exemption conditions? Tax avoided and net amount kept.Open
- Cost of an employee and corporate tax in Andorra: calculatorEmployer contributions, net pay before tax and a company's corporate tax.Open
Frequently asked questions
What is the corporate income tax rate in Cyprus in 2026?
The rate is 15 % since 1 January 2026, compared with 12.5 % until 2025.
Are dividends received by a Cypriot holding company exempt?
Qualifying dividends remain exempt from corporate income tax, including those from foreign subsidiaries, subject to conditions.
What does the reform change for outgoing payments?
A 5 % withholding tax has applied since 2026 to dividends paid to entities in low-tax jurisdictions.
Going further
- Holding company: which country to choose? Comparison of 9 jurisdictions, with dated and sourced figures
- Holding company in Andorra: complete guide (taxation, exemption, setup, risks on the French side)
- Andorran holding company and the French tax authorities: 123 bis, 209 B, 238 A and effective management
Official sources
This information is general and is not personalised legal, tax or financial advice. It is verified as of the date shown and may change.