Cyprus Tax Reform 2026

Companies

Abolished taxes

• Stamp duty taxes are fully abolished from 1 January 2026
   

Corporate tax rate increase

• For 2026 profits onwards, the corporate tax rate rises from 12.5% to 15%
• This move aligns Cyprus with international standards including the OECD 15% global minimum tax
• Cyprus tax resident companies continue to benefit from full exemptions for investment income earned, subject to conditions:
  • realized profits on trading of securities
  • unrealized profits on the revaluation of securities
  • qualifying dividend income from subsidiaries or shares held in a portfolio
  • tax neutral treatment of realized/ unrealized foreign exchange gains/ losses on trading of securities
     

Extension of loss carry forward

• The carry-forward period is extended to 7 years (previously: 5 years)
   

Crypto-asset taxation

• Profits from the sale of “crypto-assets” (sale, exchange, donation, or use as payment) are taxed at a flat 8% rate (mining acquisitions are exempt from this regime)
• Losses from crypto sales can only offset same-year profits, with no carry-forward
   

Unchanged business incentives – NID, IP Box, R&D super deduction

• The Notional Interest Deduction (“NID”) regime continues to allow up to 80% reduction in taxable income (New effective tax rate: 3%)
• The Intellectual Property (“IP”) Box regime continues to offer up to 80% exemption on qualifying IP profits
• Cyprus continues to offer a Research and Development (“R&D”) super deduction of 20% on qualifying expenses for tax years 2025 through to 2030, resulting in a total 120% deduction from taxable income.
   

Entertainment expenses deduction

• The annual deductible amount increases to EUR 30’000 per year
   

Tax resident definition update

• The definition of "resident of the Republic" in the Income Tax Law has been revised.
• For companies: Cyprus companies are now automatically tax residents here by incorporation — no need to prove they are not resident elsewhere (double tax treaties still override if they say otherwise)
• For individuals: see “Individuals section” below
   

Quick Hits on Other Changes affecting companies

Individuals

Non-domiciled (non-dom) status extension

• Non-dom status is now more flexible: after 17 years, you can extend it for up to two more 5-year periods (10 years total) by paying a €250,000 lump sum per period.
• Non-doms stay exempt from Special Defence Contribution on dividends, interest, and rental income during that time.
   

Tax resident definition update

• For individuals: the 60-day rule for Cyprus tax residency is now simpler: you no longer need to prove you're not a tax resident elsewhere to qualify.
   

Taxation of redemption of units

• From 1 January 2031, this is taxed as a dividend (previously: disposal of securities)
   

Share options

• New provisions for the taxation of share options (where granted as employment income) at a flat rate of 8%, subject to conditions
   

New Progressive Income Tax Bands

Cyprus continues to offer 50% exemption from the above income tax (“PAYE”) for 17 consecutive years, for new Cyprus tax residents.
 

Special Defence Contribution (“SDC”) - only for Cyprus domiciled tax resident shareholders

• The Special Defence Contribution on dividends drops to 5% (from 17%)
• Deemed dividend distribution (“DDD”) rules are abolished for profits from 2026 onward—much simpler for Cyprus companies (transitional rules apply for earlier profits).
   

Quick Hits on Other Changes affecting individuals