Dividend Income - tax treatment

The new amendment abolishes the minimum participation requirement of 1% for the exemption of foreign dividends from taxation in Cyprus when received by a Cyprus tax resident company. This makes it easier for portfolio investors to benefit from the dividend participation exemption. The exemption from dividends received from abroad does not apply when:
a)   more than 50% of the foreign paying company's activities result directly or indirectly in investment income, and

b)   the foreign tax burden is significantly lower than the tax rate in Cyprus, i.e. tax burden rate below 5%.

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