A Guide on Dividends in CyprusUpdated on Thursday 09th February 2017
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The shareholders of a company located in Cyprus are entitled to receive dividends for their contribution to the business’ capital. Dividends refer to a portion of the company’s profits, which are established in accordance with the decisions of the company’s board of directors and they can be provided to the shareholders as cash, stocks or other types of assets. Our team of Cypriot lawyers can offer assistance on the manner in which the dividends are distributed to the company’s founders. It is important to know that dividends in Cyprus are not imposed with a tax on income.
Dividend regulations in Cyprus
Dividends in Cyprus are required to be distributed to the company’s shareholders only from the profits incurred by the respective business. They can’t be paid from the company’s capital.
The board of directors can decide the way in which the dividends are paid to the shareholders. Thus, such payments can be completed as follows:
• final dividends;
• interim dividends.
The interim dividends refer to a payment which is concluded prior to the company’s annual general meeting and prior to filing the financial statements. The final dividends are paid only after the company has concluded the audit on the financial statements.
As a general rule, the above mentioned regulations are prescribed in the company’s articles of association and our Cypriot law firm can offer advice on the most suitable option a company should choose.
Rules related to final dividends in Cyprus
When choosing to pay final dividends, the representatives of the company should perform several compulsory steps.
First of all the financial statements (after the audit was completed) must reveal that the company provides sufficient profits which will enable the board of directors to distribute the respective dividends.
Further on, during the annual general meeting, the board of directors should present a declaration of dividends, which should not exceed a certain value expressed in the articles of association.
Businessmen are invited to address to our law firm in Cyprus for more details referring to the Cypriot regulations on dividends.