The Deemed Dividend Distribution (DDD) provisions apply to the profits of Cypriot tax resident companies that are ultimately attributable to shareholders which are Cypriot tax resident and Cypriot domiciled individuals.
These provisions do not apply to the proportion of profits that are ultimately attributable to shareholders which are non-Cypriot tax resident individuals or Cypriot tax resident individuals that are not Cypriot-domiciled.
The DDD provisions apply to all Cyprus companies and indicates that 70% of their after tax profits must be distributed within 2 years from the tax year in which the profits are generated.
Special Defence Contribution (SDC) of 17% and General Healthcare Scheme (GHS) of 2.65% (as of 1/6/2020) must be deducted at source depending on the tax residence and domicile status of each shareholder. The net amount is given to the shareholders and the SDC and GHS contributions have to be paid to the Tax Department by the Company.
The payment date for SDC is at the end of the following month after the actual distribution date.
If 70% of the relevant profits are not distributed up to the due date, then Deemed Dividend Distribution (DDD) arises and the respective SDC and GHS contributions must be paid on the distributable profits up to 70%.