Short answer: The standard corporate rate is 15% and the personal tax-free band is EUR 22,000. Crypto, share options, dividends and property each have their own conditions. Read the transition rules before applying a headline rate to your income.
This guide uses the consolidated legislation and Tax Department guidance checked on 3 October 2026, including subsequent 2026 amendments. It distinguishes a tax rate, a deduction and an exemption: none establishes your final liability without the applicable income and residence conditions.
How does corporate taxation change?
The Ministry of Finance’s corporate-tax information and the Income Tax Law set the standard corporate rate at 15% from 2026, replacing 12.5%.
Under section 13, the carry-forward limit for taxpayers required to keep books, prepare independently audited accounts and file a return is now seven years from the end of the loss year. Ownership and business-change restrictions can prevent carry-forward; this is not permission to revive every historic loss without checking the applicable rules.
Under section 9(1)(δ), qualifying research-and-development expenditure during 2025–2030 can receive an additional 20% deduction. The statutory test includes economic ownership of the resulting or potential intangible asset, accounting recognition and the applicable treatment of capital expenditure. It excludes an IP asset for which the qualifying-IP deduction has been used in any tax year. Machinery, plant and buildings have separate capital-allowance rules.
The Ministry’s IP guidance describes an 80% deduction of qualifying IP profit, subject to the nexus rules. Applying 15% to the remaining 20% gives 3% of that qualifying profit before other adjustments. It is not a 3% rate on all company earnings.
What are the personal income-tax bands?
The Income Tax Law’s 2026 schedule applies progressive rates to annual taxable income, after applicable deductions.
| Taxable-income band | Rate within band | Tax at upper edge |
|---|---|---|
| Up to EUR 22,000 | 0% | EUR 0 |
| Over EUR 22,000 to EUR 32,000 | 20% | EUR 2,000 |
| Over EUR 32,000 to EUR 42,000 | 25% | EUR 4,500 |
| Over EUR 42,000 to EUR 72,000 | 30% | EUR 13,500 |
| Over EUR 72,000 | 35% | Depends on income |
The tax-free band rose from EUR 19,500 to EUR 22,000. A top marginal rate does not mean all of a person’s income is taxed at that rate.
Personal deductions
The law and the Tax Department’s 11 May 2026 guide and FAQ describe the new deductions for qualifying resident individuals.
| Deduction | Statutory amount or annual ceiling |
|---|---|
| Dependent children | EUR 1,000 for the first; EUR 1,250 for the second; EUR 1,500 for the third and each additional qualifying child |
| Main residence | Up to EUR 2,000 for qualifying servicing-loan interest or rent for the main home in Cyprus |
| Qualifying energy improvements and electric vehicle | Up to EUR 1,000, subject to eligible expenditure and the law’s allocation rules |
| Residential natural-disaster insurance | Up to EUR 500 of qualifying premiums |
Child relief is available to each qualifying parent under the statutory conditions. The law doubles it for single-parent families and where one parent has full custody. Housing relief concerns interest, rather than repayment of mortgage principal; the law also specifies ownership, loan and expenditure conditions.
Child, housing and energy reliefs have income and family eligibility tests. Amounts are deductions from taxable income, not cash grants or automatic reductions of tax by the same amount. Actual expenditure, subsidies, allocation between spouses/partners and any permitted carry-forward must be checked. The insurance relief has its own conditions. See the detailed deduction guide and the official guide below before claiming relief.
How does the 8% crypto regime work?
Income Tax Law section 20Ε imposes 8% on gains from covered disposals of crypto-assets, using the law’s MiCA-linked definition. Disposal includes sale, gift, exchange for another crypto-asset and use as payment.
Losses under this regime can offset only crypto gains within the same tax year. They cannot be carried forward or assigned under group-loss relief. They do not reduce salary or other unrelated income.
The section expressly excludes disposal of crypto-assets acquired through mining. Income outside section 20Ε must be assessed under the ordinary income-tax provisions; this guide does not assign a blanket rate or receipt-time rule to every mining or staking activity.
Illustration: Assume EUR 220,000 of covered disposal gains and EUR 50,000 of eligible disposal losses in the same year, with no other adjustments. The net EUR 170,000 at 8% gives EUR 13,600. This example does not establish the acquisition value, deductibility or classification of an actual transaction.
How does the 8% share-option regime work?
Section 20Δ covers qualifying equity-compensation benefits of a Cyprus-resident employee or director. The Tax Commissioner must approve the plan for the relevant person.
The statutory conditions include:
- Vesting of at least three years, beginning no earlier than approval.
- No transfer of the shares or options before vesting ends.
- Shares in the employer or its direct or indirect parent, carrying the ordinary share rights and obligations apart from the permitted voting-right exception.
- An exercise price of at least 50% of market value at approval.
The 8% regime is limited to benefits no greater than twice the same employer’s employment income in the year vesting ends, excluding the equity benefit itself. Excess benefits receive ordinary treatment. There is also a EUR 1,000,000 cap over a rolling ten-year period, rather than an unlimited lifetime entitlement or a separate cap for each grant. Statutory related persons under section 33 are excluded; being a director alone does not establish exclusion.
The transitional provision allowed the Commissioner to approve qualifying earlier plans whose vesting had started before the 2025 amendment and whose minimum three-year period had not ended by 30 June 2026, provided the employer submitted the approval request by that date. That submission deadline has passed; do not present it as a future application window.
What happens to dividend SDC and non-dom status?
Under the SDC Law, liable resident individuals generally pay 5% SDC on dividends. However, dividends received in 2026–2031 from a Cyprus-resident company out of profits earned through 2025 retain 17%, with statutory credits for relevant prior SDC. Company-to-company and foreign-dividend rules have their own conditions.
Deemed distribution remains relevant to 2024 and 2025 profits under section 3Γ’s conditional 70% rule. It does not apply to profits from 2026 onward. A statement that deemed distributions have vanished for every outstanding year is incorrect.
Ordinary interest of liable individuals generally has 17% SDC; specified categories and eligible low-income cases receive different treatment under section 3B. Company interest is assessed under the income-tax rules. Rental income is outside SDC from 2026, but this does not remove income tax or applicable GeSY contributions.
Qualifying non-domiciled individuals remain exempt from SDC. The law’s deemed-domicile test is Cyprus tax residence in at least 17 of the preceding 20 tax years, alongside the domicile-of-origin provisions and exceptions. It is not an automatic 17-year exemption for every person arriving in Cyprus. See the non-dom guide for those conditions and the separate 60-day residence test.
Disguised dividends and shareholder loans
SDC section 3A imposes 10% on defined disguised-dividend benefits received by liable resident individual shareholders from Cyprus-resident companies. It covers specified personal use of company assets and below-market disposals, using statutory valuation, personal-use allocation and credit rules. Employment benefits, capital reductions and liquidation have separate exclusions; not every company benefit is automatically a disguised dividend.
Income Tax Law section 5(1)(ζ) separately treats company loans or other financial facilities, including withdrawals but excluding commercial balances, provided to individual directors or direct/indirect shareholders, their spouses or relatives up to the second degree. The monthly taxable benefit is calculated at 9% annually on the month-end balance and is handled through PAYE. Nine per cent is the benefit calculation, not the tax rate.
For a hypothetical EUR 1,000,000 balance unchanged at every month-end, this produces EUR 7,500 of taxable benefit each month, or EUR 90,000 over twelve months. The resulting tax depends on the recipient’s circumstances.
Alternative SDC payment after deemed domicile
Under SDC section 3Δ, eligible individuals without a Cyprus domicile of origin who become deemed domiciled may apply for an alternative lump-sum SDC charge, subject to Commissioner approval.
It costs EUR 250,000 upfront for each five-year period, payable by the end of the month following approval. An application is due by 30 June of the first year of the period; up to two periods are allowed. The election is irrevocable and the payment non-refundable. It is an alternative SDC charge, rather than an investment or extension of non-dom status. Its suitability depends on the actual income and applicable SDC, rather than a universal income threshold.
What about payments to foreign companies?
The SDC and Income Tax Laws contain withholding and deduction restrictions for specified payments involving EU-listed non-cooperative jurisdictions and low-tax jurisdictions. Determine the recipient’s residence/incorporation, the statutory control relationships, payment type, exceptions and anti-abuse rules before paying.
The low-tax definition concerns a third-country jurisdiction and tests its statutory corporate rate against half the Cyprus corporate rate; it is not a test of one recipient’s effective tax bill. The Council’s current EU list is the appropriate list to check for the payment date. A company being in a named country does not by itself establish every withholding condition, and an unrelated recipient does not establish that every payment is tax-free.
How does the reform affect capital gains tax?
The Capital Gains Tax Law generally imposes 20% on covered gains, subject to exclusions and reliefs.
Property-holding company shares
The law separately covers shares in companies directly holding Cyprus immovable property and shares in companies participating directly or indirectly in property-holding companies. The latter test is at least 20% of the shares’ market value derived from Cyprus immovable property, without taking liabilities into account for that test. Do not treat 20% as a universal threshold for every direct property-holding company.
Shares listed on recognised exchanges
Section 5 exempts covered gains on shares listed on a regulated market of a recognised stock exchange.
For shares on a non-regulated market of a recognised stock exchange, the exemption is conditional on cumulative disposal value in the calendar year not exceeding EUR 50,000. This is disposal value, not a EUR 50,000 gain allowance. If the threshold is exceeded, the law taxes the gains from each covered disposal, not just the excess proceeds.
A separate transition exempts qualifying shares held on 31 December 2025 and already listed on such a non-regulated market on that date. It is not a blanket exemption for every unlisted share purchased before 2026.
Individual property reliefs
| Relief | Current statutory amount and scope |
|---|---|
| General disposals | EUR 30,000 cumulative gain relief for individuals |
| Agricultural land | EUR 50,000 cumulative gain relief where farming is the individual’s main occupation |
| Qualifying main residence | EUR 150,000 gain relief, subject to section 5(2) |
Main-residence relief requires at least five years of exclusive owner occupation and limits the covered land to 1.5 decares. Repeat disposals require at least ten years of qualifying occupation. The relief is unavailable where disposal occurs at least one year after owner occupation ceased. General/agricultural and main-residence reliefs cannot simply be added together; the law provides the larger applicable relief.
Section 5(4) separately addresses specified main-residence disposals involving restructuring or lender procedures, with a EUR 450,000 disposal-proceeds ceiling and further conditions. This is not an extra EUR 450,000 lifetime gain allowance. See the property-tax guide for transaction-specific review.
Is stamp duty abolished?
The Tax Department’s stamp-duty page confirms repeal from 1 January 2026 under Law 239(I)/2025.
Documents prepared and signed by at least one party by 31 December 2025 remain subject to the earlier rules, even if another signature or stamping occurs later. New-document repeal does not cancel an older-document liability.
Must rent be paid electronically?
Assessment and Collection Law section 48A, effective 1 July 2026, requires rent for immovable property in Cyprus to be paid exclusively by bank transfer, debit/credit card or another recognised electronic payment method. The recipient must not accept another method. Cash is therefore outside the permitted methods.
Use a compliant payment method and retain the payment record. Whether a rent payment qualifies for an income-tax deduction is a separate question requiring the relevant deduction conditions; payment by bank transfer alone does not establish deductibility.
What are the registration and filing rules?
Under section 5A, an individual must notify the Tax Department for registration and a tax identification number if resident in Cyprus and aged 25 or above, or if receiving income within Income Tax Law section 5. This registration test differs from the return-filing age range.
The transition allowing registration by 31 December 2027 concerns individuals not already registered who have no section-5 income in tax years 2026 and 2027. It is not a general extension for every unregistered taxpayer.
A Cyprus-incorporated or registered company generally must notify within 60 days. The law specifies different immediate triggers for foreign-incorporated companies registering, becoming resident or acquiring covered income. Registered persons must also report changes to registered details within 60 days.
For a 2026 individual return without the audited-account requirement, section 5 sets the ordinary deadline at 31 July 2027, subject to applicable extensions. Other filing categories have different deadlines. Do not apply this to a 2025 return filed in 2026. See the filing guide for the relevant category and current announcement.
Administrative penalties and closure powers
Section 50A distinguishes missed statutory deadlines from failure to comply with a served notice. Its standard amounts are:
| Section 50A case | Individual | Legal person: turnover or assets over EUR 1 million | Other legal person |
|---|---|---|---|
| Paragraph (a): missed expressly prescribed duty/deadline | EUR 150 | EUR 500 | EUR 250 |
| Paragraph (b): non-compliance with the specified served notice after at least 60 days | EUR 300 | EUR 1,000 | EUR 500 |
These are defined statutory cases, not a universal fee for every tax failure. The law exempts specified returns filed within a publicly extended deadline. Other regimes, including SDC, need their own rules checked.
Section 50A(e) generally imposes 5% for unpaid tax after the prescribed deadline, with another 5% if non-payment continues two months later. It also has an exception for specified return-related payments made on filing within a publicly announced extended filing deadline. Interest and other consequences must be assessed separately.
Under section 32A, the Commissioner may suspend a business and seal its premises for at most ten days, subject to the statutory procedure. Grounds include the specified missing returns from 1 January 2027 (at least two tax returns, twelve monthly withholding returns or three VAT returns), qualifying unpaid debt over EUR 20,000, missing/inaccurate invoices or receipts, or obstruction of an audit.
Closure is not automatic: the law requires three notices. The first and second each give at least ten days for compliance; the third invites written representations within five days. The law also provides challenge procedures. For assessed debt, the relevant administrative/judicial challenge deadlines or proceedings must be exhausted before it counts toward the debt threshold.
How long can reassessment and record retention last?
Under section 23, the ordinary reassessment limit is six years from the later original or amended return filing date; the law also permits assessment during the tax year. Fraud or wilful omission extends the six-year limit to twelve years.
Under section 30(2), the specified books and records must be kept at least six years from the latest applicable original/amended filing deadline or actual filing date. If an audit starts in the final year, retention extends until audit completion or one year after the audit starts, whichever comes earlier. Do not calculate retention solely from an early original filing date.
Frequently asked questions
What changed in the Cyprus tax reform 2026?
The standard corporate rate is 15% and the personal tax-free band is EUR 22,000. There are conditional 8% regimes for crypto disposals and approved employee share options, new personal deductions, dividend-SDC transitions and stamp-duty repeal with an older-document exception. The changes have different conditions and commencement rules.
How is cryptocurrency taxed in Cyprus from 2026?
Income Tax Law section 20E taxes covered disposal gains at 8%. Disposal includes sale, gift, exchange and payment. Losses offset only covered crypto gains in the same year, with no carry-forward or group assignment. The regime excludes disposal of tokens acquired through mining; do not assume every token receipt or activity falls within it.
What is the new SDC rate on dividends in Cyprus?
For liable resident individuals, the general dividend SDC rate is 5%. Dividends received during 2026–2031 from a Cyprus-resident company out of profits through 2025 retain the 17% transitional rate, subject to the law’s credit rules. Qualifying non-domiciled individuals remain exempt from SDC; other taxes and contributions must be assessed separately.
How does the reform affect property transactions?
The indirect property-rich share test is now 20%, while direct holdings of Cyprus property have a separate CGT scope. General and qualifying agricultural lifetime reliefs are EUR 30,000 and EUR 50,000; qualifying main-residence relief is EUR 150,000 with occupation, land-area and other conditions. Stamp duty was repealed from 1 January 2026, but documents signed by any party before then retain the earlier rules.
Is Cyprus non-dom status still available after the reform?
Yes, subject to the SDC law’s domicile and residence conditions. The deemed-domicile test is Cyprus tax residence in at least 17 of the preceding 20 years; it is not a guaranteed 17-year exemption for every newcomer. Rental income is outside SDC generally from 2026, rather than receiving a special non-dom rental exemption.
Sources and related guides
- Income Tax Law — consolidated text.
- SDC Law — consolidated text.
- Capital Gains Tax Law — consolidated text.
- Assessment and Collection Law — consolidated text.
- Tax Department — personal deductions and reform guidance.
- Tax Department — stamp duty and transition.
- Taxes and deductions.
- Non-dom and residence.
- Tax-return filing.
- Property taxes.
- Tax identification number.