Cyprus Taxes: A Full Tax Guide For 2026

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

You are subject to paying tax in Cyprus if you are a tax resident. To be considered a tax resident, you must have spent more than 183 days in the country in a calendar year, or under the 60-day rule, which a special rule for internationally mobile people who do not spend enough time in any one country to become tax residents there can choose to be treated as tax residents in Cyprus, as long as they meet the required conditions which include:

• Spending at least 60 days in Cyprus during the calendar year 
• Not being a tax resident or spending more than 183 days in another country. 
• Having a permanent residence in Cyprus, whether rented or owned.  
• Maintaining economic ties, such as employment or running a business. 

Taxes must be filed each year, and most personal income returns are filed on the 31st of the year after the tax year. For example, a 2025 tax return would be due on 31 July 2026. These returns have to be submitted online through the TAXIS system.

The Cyprus tax system went through a major revamp, but the country still falls under one of the most tax-friendly countries in Europe. Under the personal income tax rules, the first €22,000 of income is tax-free from 2026; any income that is higher will be taxed at up to 35%.  Another notable change is that rental income is no longer subject to the Special Defence Contribution (SDC). Before, rental income was split between the two different laws, Income tax and SDC.

Even though the tax-free limit was increased, Cyprus residents will still be liable to pay into the social insurance and the national healthcare system: 

• Social insurance: Employees pay 8.8% of their salary into the social insurance system. But in 2026, this will only be charged up to a maximum salary of €68,904 per year; this means that salaries above this amount are not taxed for social insurance.
• GESY (National Healthcare): Employees contribute 2.65% of their income to Cyprus’ public healthcare system. This contribution is capped at €180,000 per year; in this case, any income above this amount is not charged.
• Retirement payouts: If you receive a lump sum when you retire, such as a severance or retirement payout, up to €200,000 will be tax-free.

The corporate tax rate in Cyprus is 15%. The is charged on the company’s net profits, meaning after their deductions. Under the new 2026 Cyprus tax reform, business losses can be carried forward for up to 7 years, and future profits can be reduced by losses from prior years. 

• Stamp duty: There is no stamp duty on corporate or commercial documents, including contracts, loan agreements, and shareholder agreements.
• Intellectual property (IP): Cyprus has an Intellectual Property (IP) Box Regime, a special regime for companies that generate income from intellectual property. These can include software, technology, patents, or other innovative products. Under this program, only 20% of profits are subject to a 3% tax.

The Special Defense Contribution (SDC) is a special tax in Cyprus applied to certain passive income, such as dividends from companies and interest. Rental income has now been removed from SDC but will be taxed under personal income.  The only people subject to this tax are tax residents who are domiciled in Cyprus, and companies based in Cyprus. Non-domiciled residents are fully exempt, but under the new 2026 tax laws, they will also be required to pay tax on rental income. 

These are the 2026 SCD rates:

• Dividends: 5%
• Interest income on specific bonds: 3%

One of the main rules about Capital Gains Tax (CGT) in Cyprus is that it is charged at a flat rate of 20%. This applies to earnings made from immovable property located in Cyprus and shares in companies that also own property. The important update to the new 2026 tax law is that a company is now considered “property-rich” if 20% of its asset value comes from Cyprus real estate, meaning that selling shares will be treated as property, and a 20% tax will be charged on the profits.

• 0% on dividends and interest: Non-doms pay no Special Defence Contribution on dividends or interest income from anywhere in the world.
• Non-dom period & extension: The country has a Cyprus Non-Domestic Tax Residence Program with several tax exemptions. The regime lasts 17 years, with an option to extend for two additional 5-year periods by paying a €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 Cyrpus offers, you first need to gain residency, and this is possible through programs such as the Cyprus Golden Visa, which allows you to obtain permanent residency through investing in real estate worth at least €300,000, or 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. If you have clients outside Cyprus, or if you are self-employed or a freelancer, you must also 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.