Cyprus Regulates Dividends, Interest, and Royalties from EU-blacklisted and Low-tax Jurisdictions

In October, the Cyprus Parliament passed bills modifying the taxation of dividends, interest, and royalties earned from Cyprus directly (or indirectly under an anti-conduit rule) by companies located in EU blacklisted non-cooperative jurisdictions (BLJs) and low-tax jurisdictions (LTJs).

The amendment includes:

• refining the withholding tax (WHT) provisions (in place from December 31, 2022) on dividends, interest, and royalties earned from Cyprus by companies located in EU Blacklisted jurisdictions directly or indirectly under an anti-conduit rule,

• introducing a WHT on dividends and denial of expense deductibility for interest and royalties, each with effect from January 1, 2026, for income earned by related companies located in LTJs direct or indirectly under similar anti-conduit rules and exemptions as with BLJs.

The latest EU blacklist of October 10, 2025 includes the following jurisdictions:

American Samoa
Anguilla
Fiji
Guam
Palau
Panama
Russia
Samoa
Trinidad and Tobago
US Virgin Islands
Vanuatu

Related anti-abuse decrees (in relation to Cyprus income tax and in relation to Special Defence Contribution) were also introduced.

The two decrees apply to the BLJs which are currently in force. Updated decrees are expected to address the LTJs that come into effect from January 1, 2026.