Dividends, interest and crypto: how Cyprus taxes investment income in 2026

The 2026 reform reshaped how investment income is taxed in Cyprus. The headline numbers are friendly, but the fine print decides the actual bill. One thing to hold throughout: a non-domiciled resident pays no Special Defence Contribution (SDC) on dividends or interest at all — so the rates below bite domiciled residents, and anyone extracting profit from a Cyprus company.

Dividends. SDC on dividends dropped from 17% to 5%, applying to profits earned from 1 January 2026.

• Deemed dividend distribution (DDD) SDC is abolished for profits from 2026 onwards; DDD on undistributed 2024–2025 profits continues until 31 December 2027.
• SDC on rental income is abolished entirely.
• «Disguised dividends» are taxed at 10%.
• SDC on bond interest is 3%.
• Dividends paid by Cyprus companies to non-resident shareholders remain subject to no SDC and no domestic withholding tax.

Interest. A non-dom resident pays no SDC on interest at all. For a domiciled individual the SDC rate on ordinary, non-bond interest from 2026 is not stated by the sources relied on here — confirm it with an adviser; bond interest is the 3% noted above.

Crypto. The Income Tax (Amending) (No. 4) Law of 2025 introduced Article 20E, taxing gains on the disposal of crypto-assets at a flat 8% from 1 January 2026, for individuals and companies alike, using the MiCA definition of a crypto-asset. Losses on crypto disposals can be set off only against crypto gains and only within the same tax year — no carry-forward, no group relief. Employee stock options under approved employer schemes are likewise taxed at 8%.

What counts as a disposal — and what does not — is the question that decides the outcome, and firm analyses agree on the split:

• Selling for fiat, spending crypto, or swapping one crypto for another — all disposals, taxed at 8%.
• Mining income — not 8%; ordinary income when received (progressive up to 35%, or 15% corporate).
• Staking rewards and DeFi yield — not 8%; ordinary income at market value on receipt, and the later sale of those tokens is then a separate 8% disposal.

The 8% is domicile-independent — non-dom status does not change it. Non-dom only removes the SDC on dividends if you extract crypto profits from a Cyprus company.