Dividends
Dividends allotted by a company with a tax residency status in the Republic are exempted from tax, provided that the Cypriot Company holds more that 1% of the share capital of the company allotting the divided. Such exemption is not absolute and it does not apply when the company which pays the dividends earns more than 50% of its income from investments and it has a reduced tax burden.

Income from Interest
Only 50% of the a company’s income earned from interest are calculated as income for tax purposes.

This exemption applies only when interest from income does not arise from the ordinary carrying out of the business of the enterprise. Interest on deposits or debenture stock and interest from loans to third parties fall into the said exemption.

On the other hand, income from interest related to the enterprise (credit to customers etc) or falling into the ordinary carrying out of the business of the company (e.g. bank facilities etc) are included in the income and are taxed accordingly.