Cyprus Tax Reform 2026: A Detailed Update for Tax Residents  

The Cyprus Tax Reform 2026 has introduced significant changes to the Cyprus tax system. Starting from 1 January 2026, the corporate income tax rate increased from 12.5% to 15% to align with the OECD Global Minimum Tax 15%.  

The reform also abolished stamp duty on corporate documents, removed deemed dividend distribution (DDD) rules, and reduced dividend withholding tax to 5%. The new tax laws also introduced incentives such as an 8% flat tax on crypto gains, extended loss carry-forwards for businesses, and personal tax deductions for housing and eco-friendly investments.  

Despite these changes, the Cyprus tax system remains one of the most attractive in Europe. These reforms have also simplified the laws and brought benefits to both domiciled and non-domiciled persons. The article will outline all the changes brought by the Cyprus tax reform 2026.  

Cyprus tax reform 2026: Key Takeaways  

• Cyprus Tax Reform 2026 raised corporate tax from 12.5% to 15%, aligning with OECD Global Minimum Tax standards. 
• Stamp duty on corporate documents is abolished.  
• The personal income tax tax-free threshold has increased to €22,000, and the remaining tax brackets are progressive, with the top rate of 35% on income over €80,000. 
• Dividend withholding tax reduced to 5%.  SDC on rental income is abolished, and foreign pensions are now taxed at 5% if the amount exceeds €5,000. 
• The “property-rich” company limit is now 20%. Capital Gains Tax doesn’t apply if land is exchanged for units under construction agreements (antiparochi). 
• Cyprus offers an 8% flat tax on crypto gains. R&D tax relief is extended until 2030, and IP Box reduces tax on qualifying IP profits to 3%. 

• The standard Corporate Income Tax (CIT) rate in Cyprus increased from 12.5% to 15%. This aligns Cyprus with the OECD Global Minimum Tax (15%) for large multinational groups. 
• Deemed Dividend Distribution (DDD) abolished: The Deemed Dividend Distribution (DDD) rules have been abolished for profits earned from 2026 onwards. Companies no longer have to pay tax on dividends they assume when reinvesting profits. 
• Loss Carry-Forward: The period to carry forward business tax losses has been extended from 5 to 7 years 

Corporate tax incentives that did not change:  

• The Cyprus IP Box Regime is still fully in place for qualifying intellectual property, such as patented inventions and copyrighted software. 
• Companies can deduct 80% of their qualifying IP profits, meaning they pay tax on only 20% of the income. The new 15% corporate tax rate results in an effective tax rate of just 3%.  
• Notional Interest Deduction (NID): The NID also remains operational. The NID allows companies to reduce their tax amounts when they invest their own capital, not just when they take loans. 
• R&D Tax Relief extended until 2030: The R&D tax relief, which is there for companies in Cyprus to deduct qualifying R&D expenses, has been extended to 2030.  

Cyprus introduced a flat 8% tax rate on profits coming from the disposal of crypto-assets for both individuals and companies. Qualifying disposable assets include:  

• Sale of crypto-assets  
• Gifting crypto-assets  
• Exchange of one crypto-asset for another  
• Using crypto as a means of payment  

The tax-free limit has been increased to €22,000, and all subsequent tax brackets have also increased, with the top 35% rate now applying to income over €72,000. 

Household deductions  

These deductions are available to spouses or parents whose family income falls below specific income requirements: 

• Child allowance: Deductions of €1,000 for the 1st child, €1,250 for the 2nd, and €1,500 for the 3rd or more (per parent). 
• Housing relief: Up to €2,000 per parent for rent or mortgage interest on a main home. 
• Green credits: Up to €1,000 for buying an electric vehicle or making energy-efficient home improvements. 
• Insurance: A deduction of up to €500 for home insurance covering natural disasters. 

Household- and income-based eligibility thresholds: 

To qualify for these deductions, your total annual family income must fall below the following thresholds:  

• Up to €90,000 for couples/cohabitees without children  
• Up to €100,000 for families with one or two children  
• Up to €150,000 for families with three or four children  
• Up to €200,000 for families with five or more children  
• Up to €40,000 for single individuals 

• For Cyprus tax residents and domiciled people, the Special Defence Contribution (SDC) on dividends has been reduced from 17% to 5%. 
• SDC is no longer charged on rental income. Rental income is now only subject to standard Income Tax. 

Non-Domiciles Individuals  

For those considered non-domiciled in Cyprus, the benefits of the Cyprus Non-Domicile Tax Residence program have even more improved benefits, which include:  

• After a 17-year exemption expires, non-doms can  extend the SDC exemption for an additional five years, with the possibility of another five-year extension by paying €250,000 per period.  
• Non-Doms are still exempt from SDC on dividends, interest, rental income. 
• Stock options from approved employer plans are taxed at 8%, with a cap of €1 million over 10 years. 
• Ex gratia payments above €200,000 are taxed at 20%, instead of the previous 0% rate. 
• Foreign pensions still benefit from a flat 5% tax on amounts exceeding €5,000.  
• Investors interested in the Cyprus Golden Visa can qualify for these Cyprus tax exemptions if they move their tax residency to the country. This also applies to those on the Cyprus Digital Nomad Visa.  

A company is considered ‘property-rich’ if 20% or more of its value derives from immovable property in Cyprus. When shares in such companies are sold, the gain is subject to Capital Gains Tax at 20% 

Capital Gains Tax (CGT) now applies to more situations. There is an exemption from CGT for property exchanged under construction agreements called antiparochi. In other words, owners can get units or parts of a building in return for giving land to developers, as long as construction is completed within 5 years. 

From 1 January 2026, there will be no Stamp Duty on corporate documents. This includes commercial agreements, shareholder agreements, loan agreements, and other corporate or transactional documents.  

The transitional rules imply that any documents signed from 1 January 2026 will not need Stamp Duty. Documents signed on or before 31 December 2025 might still need to be stamped.