+357 22 777802 admin@panaudit.eu

Defence Fund Contribution

Special contribution for the defenses is imposed in accordance with the Special Contribution for the Defence of the Republic Law (Law No. 117 (I) of 2002, as amended) on income from sources in Cyprus, as stipulated below, which is derived by individuals and companies resident in Cyprus. An individual is resident in Cyprus, if he / she resides therein for a period or more which is aggregate exceed 183 days. A company is resident in Cyprus, if its management and control are excersised in Cyprus.
The income upon which it is imposed, is restricted to dividends, interest, rents and the taxable income of public corporate bodies. The Law stipulates for various exemptions, provided certain conditions are satisfied.





Legal Entities


Dividend income from Cyprus resident Companies



Dividend income from non-Cyprus resident Companies



Interest income arising from the ordinary activities or closely related to the ordinary activities of the business (active income) and interest earned by an open or close collective investment scheme



Other interest (Passive Inomce) and notional interest



Interest from saving certificates, development bonds and deposits with the Housing Finance Corporation



Interest accruing to a Provident Fund



75 % of the Gross Rental Income



In the case that the dividends are received from a company, the shareholders of which hold directly at least 1% of the share capital, then the dividends are exempt from the payment of special contribution. This exception does not apply if :

  • the company paying the dividend engages more than 50% in activities that lead to investment income, and foreign tax burden on the income of the company paying the dividend is substantially lower than the tax burden of the company that receive the dividend.


An individual whose annual income, including interest, does not exceed the amount of € 12.000, has the right to a refund of the tax withheld on interest in excess of the amount corresponding to 3%

Allowance for foreign tax

In the case that foreign tax was paid on income subject to special contribution, this can be given as an allowance against the special contribution payable on the income, irrespective of the existence of a double taxation relief with the foreign country.

Deemed distribution

A company resident in Cyprus has to pay 15% special contribution to the defence fund based on a deemed distribution of 70% of the accounting profits after taxation and before set – off losses brought forward from previous years, after taking into consideration any dividents paid withing the two years and which relate to residents of Cyprus.


International business companies, which elected to be taxed in accordance with the transitional provisions for the years 2003 – 2005, are exempt from payment of special contribution to the defence fund for this period.

Defence Tax Rates

From To





01/01/1991 31/07/1998 3 3
01/01/1998 30/03/2000 4 4
01/04/2000 30/06/2002 3
01/04/2000 31/12/2002 3
01/07/2002 30/08/2011 10
01/01/2003 30/08/2011 15
31/08/2011 28/04/2013 17 15
29/04/2013   20 30
01/01/2014   17  



The information contained in this Site has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this newsletter. PanAudit Konnaris Limited would be pleased to advise readers on how to apply the principles set out in this newsletter to their specific circumstances. PanAudit Konnaris Limited accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of any material in this newsletter.

Our Mission Is to Build & Secure your Future



Registered office:  25th March Str. no 19, 1st Floor, 2408 Engomi, Nicosia – Cyprus

Address: P.O. Box 25621, 1311 Nicosia – Cyprus
Telephone: +357 22 777802
Fax: +357 22 771469

Pavlos Demetriou

Audit & Assurance Manager
Mr. Pavlos Demetriou holds a bachelor of Science (BSc) in Accounting and Finance and he is a member of the Association of Chartered Certified Accountants (ACCA) and a member of ICPAC. He has extensive knowledge and experience of more than 10 years in Audit and Assurance.


Aristi Xenofontos

Human Resource Supervisor
Mrs Aristi Xenophontos has a Diploma in Office Administration and in LCCI Accounting and has extensive knowledge and experience of more than6years in Human Resource and Office Administration.


Demetra Kyprianou

Account Manager
Mrs. Demetra Kyprianou has a Bachelor Degree in Business Administration and Diploma in LCCI Accounting Third Level and has more than 10 years of experience in the areas of the firm’s activities.

Andri Andreou

Accounting and Tax Manager
Mrs Andri Andreou has a Diploma in Business Administration and in LCCI Accounting and has extensive knowledge and experience of more than 10 years in Accounting and Tax.