Cyprus tax reform 2026: what changed and who benefits

The reform in one table

What changes for your company

The rate rises to 15%. It applies to tax years starting on 1 January 2026, existing companies included. It matches the OECD global minimum for large groups, but in Cyprus it applies to every company.

Residency no longer depends only on management. From 2026, a company incorporated in Cyprus is tax resident there simply because it was incorporated there, unless a tax treaty says otherwise. This does not change what your home country asks: if the company is run from London or Tel Aviv, the treaty will usually treat it as resident there. Substance still matters.

More room for losses. Tax losses can be carried forward for 7 years instead of 5.

Shorter deadlines. The corporate tax return is due 13 months after year end, not 15, and the final payment is due on the same date. For 2026 that is 31 January 2028. The statute of limitations now runs from the date you file.

Fewer indirect taxes. Stamp duty is abolished from 1 January 2026, and so is the 1.5% tax on insurance premiums.

More deductions. The 20% R&D super deduction is extended to 2030, indefinite-life intangibles can be written off over 20 years, and entertainment costs are capped at 1% of turnover or €30,000.

Dividends: the big change

The Special Defence Contribution (SDC) is the Cyprus tax on dividends. The reform simplifies it:

• Domiciled residents pay 5% on dividends from profits earned from 2026, instead of 17%.
• Deemed distribution is abolished for profits from 2026. Before, if a company did not distribute at least 70% of its profit within two years, the tax office treated it as paid out to domiciled shareholders.
• Interest and rental income no longer pay SDC.
• For domiciled shareholders, certain hidden benefits are treated as dividends, with 10% withholding.

For a non-dom, nothing changes: 0% SDC on dividends and interest. You only pay the 2.65% health contribution (GESY), capped at €180,000 of income a year, so about €4,770 at most.

What changes for individuals

Lower income tax for middle earners. The new bands: 0% up to €22,000, 20% up to €32,000, 25% up to €42,000, 30% up to €72,000 and 35% above.

New family allowances. €1,000 for the first child, €1,250 for the second and €1,500 from the third, per parent, if family income is within set limits. Plus up to €2,000 for mortgage interest or rent on your main home and up to €1,000 for energy upgrades or an electric car.

Mandatory returns. Every tax resident aged 25 or over must file a return, even with no taxable income.

Crypto at 8%. Gains are taxed at a flat 8%, including those of a capital nature. Losses only offset other crypto gains.

Stock options at 8%. Approved employee share option plans are taxed at 8%, with a €1 million cap over 10 years.

Non-dom: now extendable

The non-dom regime exempts you from SDC for 17 of the last 20 years. Until now nothing could be done after that. From 2026, someone who becomes deemed domiciled can keep the exemption for five more years by paying €250,000 upfront, and do it once more. The payment is irrevocable. Details in our guide to Cyprus tax residency.

The 60-day rule, easier

You used to have to prove you were not tax resident anywhere else. That condition is gone. If another country also treats you as resident, the tax treaty between the two decides.

Is Cyprus still worth it?

A round-number example: a company with €300,000 of profit.

The increase costs €7,500 a year in this example. In return, a non-dom shareholder still takes dividends almost tax-free, and a domiciled one pays 5% instead of 17%. Against a 25% rate, the gap is still €30,000 a year in corporate tax alone. This is illustrative: it excludes structure costs and any personal tax at home if you do not move.

What to do now

1. Recalculate your 2026 provisional tax at 15%.
2. Note the new deadlines: 13 months for the return and the final payment.
3. Check your non-dom date if you have lived in Cyprus for many years, and weigh the extension.
4. Check substance: residency by incorporation does not protect you against your home country if the company is run from there.

Thinking of moving your company? Start with our guide to setting up a company in Cyprus or book a free 30-minute assessment.

This guide is general information, not tax or legal advice. Every case needs individual analysis.