Cyprus Taxes: Income Tax, Corporate Tax, and Non-Dom Benefits in 2026

The Cyprus tax system is administered by the Cyprus Tax Department, which operates under the Ministry of Finance. It is responsible for collecting personal income tax, corporate tax, capital gains tax, VAT, and social insurance contributions.

Before looking at the tax-residence rules, it helps to separate these three concepts that are often confused:

• Cyprus residence permit: The residence permit you hold, whether temporary or permanent, is your immigration status, meaning your legal reason to be living in Cyprus. An example would be someone who has a Cyprus Golden Visa or the Cyprus Digital Nomad Visa. 
• Cyprus tax residence: Your tax status is based on the time you spend in Cyprus and your ties to the country.
• Cyprus domicile: Your domicile is determined by whether you consider Cyprus as your permanent or long-term home. This is an important distinction because it affects how you are taxed on your income and assets. 

Cyprus tax residency

Cyprus is positions itself as an attractive tax authority because it has two tax residency tests that benefit people with different goals and lifestyles. 

• The 183-day test: Under the regular 183-day test, you are a Cyprus tax resident if you spend more than 183 days in Cyprus during a 12-month period. 
• The 60-day test: This is an alternative option for people who are internationally mobile. But to be able to qualify, these are the rules that must be followed from 1 January 2026:
  • Spend at least 60 days in Cyprus during the calendar year.
  • Spend not more than 183 days in one country during that same year.
  • You have to continue carrying on a business in Cyprus, be employed in Cyprus, or have an office in a Cyprus company that is also a tax resident. The business, employment, or office should also continue running throughout the tax year.
  • Maintain a permanent home in Cyprus, whether owned or rented.

Cyprus taxes went through a major reform, and the personal income tax was affected. According to the official Cyprus Tax Department, from January 2026, the first €22,000 of income is tax free and any amount above that is taxed to up tp 35%.

Another change that came from the 2026 tax reform is that rental income is no longer subject to the Special Defense Contribution (SDC). Before, rental income was split between the two different laws: income tax and SDC.

Although the tax-free limit has increased, Cyprus residents still need to pay social insurance and national healthcare contributions in addition to income tax:

• Social insurance: Employees pay 8.8% of their salary, capped at €68,904 in yearly earnings for 2026.
• GESY (National Healthcare System): Employees contribute 2.65%; this too is capped at €180,000 of annual income.
• Retirement and severance lump sums: A genuine retirement gratuity is completely tax-free. If you receive an ex-gratia lump sum at the first €200,000 is tax-free. Any amount over €200,000 is taxed at a flat rate of 20% under the Cyprus tax update for 2026.

The corporate tax rate in Cyprus is 15% from 1 January 2026, up from the previous rate of 12.5%. It applies to a company’s net profits after deductions. Under the 2026 Cyprus tax reform, business losses can now be carried over for up to 7 years. Under the previous rules, it was only up to 5 years. 

These corporate tax rules apply to companies, not individuals. Your personal tax position as an employee, director, or shareholder is taxed under different rules. 

• Stamp duty was completely removed from corporate and commercial documents, such as contracts and loan agreements, starting 1 January 2026.
• Intellectual property (IP): Cyprus has an IP Box regime for companies that earn income from qualifying IP, such as software, patents, or other innovations. But that regime has its own qualifying conditions.

The Special Defense Contribution (SDC) is a separate tax from personal income tax. It applies to certain passive income, such as dividends and specific types of interest, earned by people who are both tax residents and domiciled in Cyprus, as well as by companies based in the country. But one of the bigger changes from the 2026 Cyprus tax reform was that rental income is no longer subject to SDC because it is now taxed under personal income tax instead.

If you qualify for Cyprus non-dom status, you can be free from paying SDC on dividends and interest. This does not mean you are not paying income tax, government contributions, or taxes owed in other countries. Your eligibility and what non-dom status means for you will depend on your domicile history.

2026 SDC rates for domiciled tax residents:

Capital Gains Tax (CGT) in Cyprus is charged at a flat rate of 20% on profits from selling immovable property located in Cyprus. It is also taxed on shares in companies that own property in Cyprus, and there are exemptions available. 

The 2026 tax rules have changed a few things for companies that also own real estate. If your company is considered rich in property, then it means at least 20% of this asset’s value comes from real estate in Cyprus. In reality, it means selling shares in such a company will be treated like a property sale for capital gains tax purposes.  

These are the property fees based on the Department of Lands and Surveys in Cyprus.

From 1 January 2026, gains from disposing of crypto-assets covered by Article 20E of the tax law are taxed at a flat 8%, whether or not the disposal is made as part of a business.

Taxable disposals include:

• Selling crypto-assets
• Gifting crypto-assets
• Exchanging one crypto-asset for another
• Using crypto as a means of payment

There are a few important aspects to look out for. Crypto-assets acquired through mining are not covered by this special 8% treatment. If you have losses from selling crypto, you can use them to offset any crypto gains you make in the same tax year. However, you cannot carry these losses over into future years.

These are the taxes charged for VAT according to the VAT Law 95(I)/2000 and Tax Department in Cyprus.

• 0% on dividends and interest: None domiciled people do not pay Special Defense Contribution on dividends or interest income from anywhere in the world.
• Non-dom period and extension: The country has a Cyprus Non-Domestic Tax Residence Program with many tax exemptions. The regime is valid for 17 years, with an option to extend for two additional 5-year periods. But to extend you need to pay  €250,000 lump sum per period.
• No tax on most capital gains: Most profits made from selling securities like shares and bonds are tax-free.
• No wealth, inheritance, or gift taxes: Cyprus does not charge any wealth, inheritance, or gift taxes, which can be a huge benefit for anyone looking into estate planning and wealth protection.
• Salary tax relief for new residents: New tax residents, as well as non-doms, can get a 50% income tax exemption on salaries over €55,000 for up to 17 years.
• Low tax on foreign pensions: Foreign pensions are taxed at 5% on amounts over €5,000 per year.

To qualify for some of the tax exemptions Cyprus offers, you first need to gain residency, and this is possible through programs such as the Cyprus Golden Visa. The residency by investment allows investors to get permanent residency by investing in real estate worth at least €300,000. You can also invest in shares of a business that employs at least five people or by contributing to a Cyprus Collective Investment Organization.

Cyprus also offers the Cyprus Digital Nomad Visa, which is best for remote workers who work for companies outside of the country. The requirement is also to earn at least €3,500 per month. However, even with these residence permits, you must first become a tax resident in Cyprus to qualify for the tax benefits.

Cyprus has double tax treaties with over 60 countries. This agreement is meant to protect Cypriot tax residents from paying taxes on same income that is not taxed twice.