Cyprus: Tax

As per the recent amendments to Cyprus tax legislation, as part of the Cyprus Tax Reform (for a comprehensive overview of the main provisions, you can access our report hereopens in a new tab), an alternative method of taxation in respect of Special Defence Contribution (“SDC”) has been introduced, in line with Article 3D of the Special Contribution for the Defence of the Republic of Cyprus Law of 2022, as amended (“SDC Law”), with effect from 1 January 2026.

The Cyprus transfer pricing landscape changed materially with N.244(I)/2025, which amended Article 33 of the Income Tax Law as part of the broader 2026 reform package. From 1 January 2026, the thresholds that determine whether your Cyprus subsidiary must keep a Cyprus Local File have been raised significantly. Many group controllers will read this as good news.

Cyprus has long been an attractive destination for individuals seeking a stable legal system, a favourable tax environment and a high quality of life.