10/01/2026
🇨🇾 Cyprus Tax Reform 2026 — What Actually Changes (and Why It Matters)
The new Cyprus tax framework for 2026 brings meaningful shifts for businesses, investors, and individuals. Here’s a clear breakdown of the changes that matter 👇
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🏢 Corporate & Business Taxation
• Corporate Income Tax increases from 12.5% → 15%, aligning Cyprus with OECD Pillar Two standards
• Loss carry-forward extended from 5 to 7 years, improving long-term planning
• R&D super-deduction at 120% extended until 2030 — a strong incentive for innovation
• Entertainment expenses deduction increases to €30,000 annually
• Flat 8% tax on:
– Crypto asset disposals
– Share-based remuneration under approved employee stock schemes
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📈 Shareholder & Investment Income
• SDC on dividends reduced from 17% to 5% (actual distributions only)
• SDC on rental income abolished
• Deemed dividend distribution fully repealed, allowing companies to retain profits without forced taxation
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👨👩👧 Personal Taxation
• Tax-free threshold raised to €22,000
• New progressive income tax brackets:
– €22,001–€32,000 → 20%
– €32,001–€42,000 → 25%
– €42,001–€72,000 → 30%
– Above €72,001 → 35%
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🎓 Family & Student Deductions (per parent)
• 1st child: €1,000
• 2nd child: €1,250
• 3rd+ child: €1,500
Income eligibility:
• Up to €100k (1–2 children)
• Up to €150k (3–4 children)
• Up to €200k (5+ children)
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🏡 Housing & Green Incentives
• Mortgage interest or rent deduction up to €2,000
• Green investments deduction up to €1,000
• Home insurance for natural disasters up to €500
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📄 Stamp Duty & Compliance
• Stamp duty abolished for most transactions
• Exceptions remain for areas like real estate, banking, and insurance
• Enhanced compliance rules with:
– Traceable payments
– Expanded powers for the Tax Commissioner
– Alignment with EU tax transparency standards
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What this really means:
Cyprus is moving toward a more transparent, family-friendly, and investment-aware tax system, while staying competitive internationally.
If you’re a business owner, investor, or professional planning ahead for 2026, these changes are worth understanding early.
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📌 This post is informational, not tax advice. Always consult your tax advisor for personalized planning.
