Cyprus Tax Reform 2026 – Comprehensive Overview

1. Corporation Tax

• Rate increase: From 12.5% to 15% for profits starting 2026.
• Aligns Cyprus with OECD minimum 15% global tax standards, although there was no need for it (read more here).

2. Dividend Tax

• Rate reduced: From 17% to 5% for Cyprus-domiciled individuals.
• Deemed dividend tax abolished.

3. Personal Income Tax

• New tax-free threshold: €22,000 (up from €19,500).
• Progressive tax bands:

• Families benefit from child allowances:
  • 1st child €1,000, 2nd €1,250, 3rd+ €1,500 per parent.
  • Rent/mortgage up to €2,000 per parent.
  • EV/green investments €1,000 per parent.
  • Home insurance €500.

• Household income thresholds apply: up to €90k (no children), €100k (1–2 kids), €150k (3–4 kids), €200k (5+ kids).

Conditions for Allowances

• Tax returns for spouses, civil partners, or single individuals must be filed on time.
• Consent required for mutual disclosure of tax information between spouses or civil partners.

• Definitions:
  • Dependent children, single-parent family, family income, student — per Child Benefit Law.
  • Single individual — lives alone, not married or in civil partnership, not cohabiting with adults or dependents.
  • Civil partners — as per Civil Partnership Law.

Detailed Salary Examples with Calculations are Provided in Appendix 1 (see below)

4. Stamp Duty

• Fully abolished from 1 January 2026.

5. Antiparoxi & Capital Gains Tax (CGT)

a) Antiparoxi fully abolished for sellers

What is antiparoxi; it is a Greek term which describes the exchange of a plot (with or without a building) to a developer to develop it.

b) General ifetime Exemptions extended

Lifetime Exemptions for the disposal of immovable property have been increased as shown below;

• General exemption €30,000 (was €17,086)
• Agricultural land €50,000 (was €25,629)
• Primary residence €150,000 (was €85,430)

Example: How do these lifetime exemptions work?

When an owner of immovable property disposes of its primary residency, he / she will be taxed on the profit less the lifetime exemption; i.e. 150,000 of profit.

c) Property-rich shares threshold reduced from 50% to 20%.

6. Crypto-asset Taxation

• Flat 8% tax on gains from sale, exchange, donation, or payment.
• Mining acquisitions exempt.
• Losses offset only same-year profits.

7. Commissioner Powers

• Can suspend business operation and seal premises if:
  • At least 2 tax returns or 12 monthly withholding returns are missing.
  • Taxes exceeding €20,000 remain unpaid.
  • Inaccurate invoices or obstruction of audit.
• Suspension limited to 10 days with 3 prior notifications.

8. Other Corporate Provisions

• Losses carry forward 7 years (from 5 years)
• Entertainment expenses deduction up to €30,000 (from 17,000)
• Cyprus companies automatically tax resident by incorporation.
• Directors liable for actions/omissions even after resignation.
• Filing deadlines: companies/audited 31 Jan (13 months post year-end); TD7 31 March.

9. Individuals / Non-Dom / Pensioners

• Non-Dom regime extended to 10 years; payment of a lump sum €250k per 5 years is required. The Cyprus Non Dom can now last for 27 years!
• Non-Doms exempt from SDC on dividends, interest, rental income.
• Pension special regime amended: >€5,000 taxed at 5%.
• Stock options under approved employer plan taxed at 8% (cap €1M over 10 years).
• Ex gratia payments >€200k taxed at 20% (form 0% tax)
• Deductible insurance premiums expanded to cover permanent/partial incapacity.

Examples

Dividend Income and Applicable Special Defence Tax (SDC); the dividend tax

• Dividend €100,000, Cyprus domiciled
• Before 2026: €17,000 SDC (was 17%)
• After 2026: €5,000 SDC (become 5%)
• Deemed dividend tax abolished

Crypto-Asset Tax

• Sell crypto €50,000, cost €20,000 → gain €30,000
• Before 2026: Corporate Tax 12.5% or Personal Tax up to 35%.
• After 2026: 8% → €2,400 tax
• Mining acquisitions exempt
• Losses offset same-year only

Property Sale & Capital Gains Tax (CGT)

• Primary residence €200,000 gain (Selling Price less costs less indexation allowance)
• Capital Gains Tax at 20% (remains the same)
• Before 2026: €114,570 taxable → CGT payable
• After 2026: €50,000 taxable → reduced CGT

Non-Dom & Special Defense Tax (SDT)

• Resident >17 years, dividends €500,000
• SDC: exempt under Non-Dom 5+5 year regime

In this example a person who is in the 17th year of his non domiciled can purchase additional 10 years (Euro 250k per 5 years) and pay 0% dividend tax on any profit, in our example on dividends of €500,000.

SUMMARISED CHANGES IN TABLE FORMAT

1. Corporate Taxation

2. Dividend & SDC Changes

3. Personal Income Tax

Child and Family Allowances

• 1st child: €1,000
• 2nd child: €1,250
• 3rd+ child: €1,500
• Rent/mortgage interest up to €2,000
• Energy/EV upgrades up to €1,000 per parent
• Home insurance €500
• Family income thresholds: ≤€90k no kids, €100k 1–2 kids, €150k 3–4 kids, €200k 5+ kids

Detailed Salary Examples

Without Children

With Children / Family Deductions

Conclusion

The 2026 Cyprus Tax Reform modernises taxation while preserving incentives for businesses, investors, and individuals. With enhanced transparency, stronger enforcement, international alignment, and expanded family/social deductions, taxpayers must plan strategically to optimise benefits. The detailed examples above illustrate before-and-after scenarios across salaries, families, dividends, crypto, and property, offering practical insights for real-life application. This reform represents a comprehensive overhaul of Cyprus' tax system, balancing revenue collection with incentives for investment, energy efficiency, R&D, and compliance modernization.

About Us

CYAUSE Audit Services is an Audit & Assurance firm with offices in Nicosia and Limassol in Cyprus regulated by the UK ICAEW, International ACCA and the Cyprus ICPAC.

Our firm has extensive knowledge and experience in local tax legislations, relocation consultation, international tax planning solutions and licensing of investment firms, funds and insurance agents / brokers. Our routine day to day services include accounting, audit, tax and advisory services to international businesses interested in relocating or establishing presence to Cyprus.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.