Cyprus Tax Reform effective from 1st January 2026

Key points for Companies:

• Introduction of tax for Crypto gains  

• Higher Transfer Pricing local file thresholds

• The Corporate tax rate increases from 12.5% to 15%

• Losses carry forward extension from 5 years to 7 years

• Special mode for taxation for approved share -based schemes

• Extension of 120% super deduction for R&D expenditure on intangible assets up to 2030

• Tax rate of 10% applied on disguised dividends

Changes in Special Defence Contributions:

• Deemed Dividend Distribution rules are abolished from profits 2026 (17% still applies for dividends out of 2025 and before profits)

• Actual dividends from profits 2026 onwards SDC rate of 5%

• Rental Income is exempt from SDC

Key points for Individuals

• Annual turnover for Individuals with obligation to prepare Audited Financial Statements increases from €70.000 to €120.000

• All tax Residents individuals have an obligation to file a personal tax return irrespective of their income ( ages 25-71)

• Deductions for children, students, housing, green transition

• Tax free threshold has increased to €22.000 from €19.500

• Personal income tax bands:

Before

0-€19.500	0
€19.501-€28.000	20%
€28.001-€36.000	25%
€36.001-€60.000	30%
€60.000 -	35%

2026 onwards

0-€22.000	0
€22.001-€32.000	20%
€32.001-€42.000	25%
€42.001-€72.000	30%
€72.000 -	35%

Other Key points

• Stamp Duty law has been fully abolished

• Partnerships will have an obligation to file tax returns

• Upwards adjustments to Capital Gains tax lifetime exemptions