One of the most important decisions for a Cyprus company owner is how to extract profits: salary, dividends, or a combination. For non-dom shareholders, the answer is almost always maximize dividends.
On a 100,000 EUR extraction from your Cyprus company, taking it as dividends (non-dom) costs 2,650 EUR in GESY. Taking it as salary costs approximately 32,897 EUR in income tax, Social Insurance, and GESY combined — over 12x more.
The Core Numbers: Salary vs Dividends
Salary: Full Cost on 100,000 EUR
Employee deductions:
| Item | Rate | Amount |
|---|---|---|
| Income tax (progressive) | 0-35% | 24,385 EUR |
| GESY (employee) | 2.65% | 2,650 EUR |
| Social Insurance (employee) | 8.8% (capped) | 5,862 EUR |
| Total employee cost | 32,897 EUR | |
| Net take-home | 67,103 EUR |
Income tax breakdown on 100,000 EUR:
| Band | Rate | Tax |
|---|---|---|
| 0 - 22,000 EUR | 0% | 0 EUR |
| 22,001 - 28,000 EUR | 20% | 1,200 EUR |
| 28,001 - 36,300 EUR | 25% | 2,075 EUR |
| 36,301 - 60,000 EUR | 30% | 7,110 EUR |
| 60,001 - 100,000 EUR | 35% | 14,000 EUR |
| Total | 24,385 EUR |
Additional employer costs on the 100k salary:
| Item | Rate | Amount |
|---|---|---|
| GESY (employer) | 2.90% | 2,900 EUR |
| Social Insurance (employer) | 8.8% capped | 5,862 EUR |
| Social Cohesion + Redundancy + HRDA | 3.70% | 3,700 EUR |
| Total employer add-on | 12,462 EUR |
Total company cost to pay 100k salary: 112,462 EUR. Net in pocket: 67,103 EUR.
Dividends: The Non-Dom Calculation
For 100,000 EUR extracted as dividends (after 15% corporate tax):
| Item | Amount |
|---|---|
| Company profit before tax | 117,647 EUR |
| Corporation tax (15%) | 17,647 EUR |
| Net dividend | 100,000 EUR |
| Income tax (non-dom) | 0 EUR |
| SDC (non-dom) | 0 EUR |
| GESY (2.65%) | 2,650 EUR |
| Net in pocket | 97,350 EUR |
| Total tax (CT + GESY) | 20,297 EUR |
Comparison Table
| Method | Total tax | Net in pocket | Effective rate |
|---|---|---|---|
| Dividends (non-dom) | 20,297 EUR | 97,350 EUR | 17.2% |
| Salary | 45,359 EUR | 67,103 EUR | 40.3% |
Dividends net you 30,247 EUR more per year on the same pre-tax company profit.
The Hybrid Strategy: Recommended Approach
Most Cyprus accountants recommend a hybrid for non-dom owners planning long-term residency:
| Component | Amount | Reason |
|---|---|---|
| Base salary | 22,000 EUR/year | Below income tax threshold; builds SI entitlements |
| Additional dividends | Remainder | 2.65% GESY only |
Total cost of the 22,000 EUR salary:
| Item | Amount |
|---|---|
| Income tax | 0 EUR |
| Employee GESY + SI | 2,519 EUR |
| Employer GESY + SI + levies | 3,388 EUR |
| Total | 5,907 EUR |
For under 6,000 EUR/year, you build Social Insurance entitlements towards pension, sickness benefits, and social security access. This is generally worthwhile for anyone planning to live in Cyprus for 5+ years.
At Every Income Level, Dividends Win
| Annual extraction | Salary deductions | Dividend tax (non-dom) | Dividend saving |
|---|---|---|---|
| 22,000 EUR | 2,519 EUR (SI+GESY) | 583 EUR | 1,936 EUR |
| 50,000 EUR | 14,600 EUR | 1,325 EUR | 13,275 EUR |
| 100,000 EUR | 32,897 EUR | 2,650 EUR | 30,247 EUR |
| 200,000 EUR | ~82,000 EUR | 4,770 EUR (capped) | ~77,230 EUR |
| 500,000 EUR | ~220,000 EUR | 4,770 EUR (capped) | ~215,000 EUR |
There is no income level where salary becomes more efficient than dividends for a non-dom in Cyprus.
Director Fees: Same as Salary
Director fees are treated identically to salary under Cyprus tax law:
- Progressive income tax (0-35%)
- Social Insurance contributions (both sides)
- GESY (2.65% employee + 2.90% employer)
There is no tax advantage to calling a payment a "director fee" rather than a "salary." Both trigger the full employment tax burden. See our full director fees vs dividends guide.
The Dividend Process: Compliance Steps
To legally pay yourself dividends and comply with Cyprus tax law:
- Board resolution: Pass a formal written board resolution approving the dividend amount and date
- Check reserves: Dividends can only be paid from distributable profits verified in audited accounts
- Make the payment: Transfer from company bank account to personal account
- File TD603: Submit the GESY declaration on TAXISnet by the end of the month following payment
- Pay GESY: Pay the 2.65% via JCCSmart using the Payment Reference Number from TD603
Missing the TD603 deadline triggers a 100 EUR fixed penalty plus 5%/year interest on GESY owed.
Find Cyprus accountants who can set up compliant dividend processes at CyprusDesk.
Summary: Optimal Pay Structure for Non-Dom Founders
- Minimum salary: 22,000 EUR/year (tax-free; builds SI)
- Everything else: dividends at 2.65% GESY
- Never: high salary — 20-35% income tax plus SI is extremely inefficient
At 150,000 EUR total annual extraction:
- Salary 22,000 + Dividends 128,000 = Total tax ~9,392 EUR (6.3% effective)
- All salary = ~51,000 EUR deductions (34% effective)
Use our salary vs dividends calculator to model your income level.
Disclaimer: Tax calculations depend on individual circumstances. This article is informational only. Consult a qualified ICPAC-registered advisor for personalized advice. Find professionals at CyprusDesk.