Cyprus passed its biggest tax reform in two decades at the end of 2025. Most of the changes apply from 1 January 2026. Some make Cyprus more expensive for companies, others make it cheaper for shareholders. Here is what changed and what it means if you own or plan to open a Cyprus company. This is a general overview, not personal tax advice.
The changes at a glance
- Corporate tax: up from 12.5% to 15%.
- Deemed dividend distribution: abolished for profits earned from 2026.
- Defence contribution on dividends: down from 17% to 5% for Cyprus-domiciled residents.
- Stamp duty: abolished.
- Tax losses: can now be carried forward for 7 years instead of 5.
- Crypto gains: a flat 8% tax.
- Tax return deadline: now 13 months after the year end instead of 15.
Corporate tax rises to 15%
Cyprus companies now pay 15% on taxable profit. The increase brings Cyprus in line with the global minimum tax agreed by OECD countries, while keeping it among the most competitive rates in the EU. The usual exemptions remain: dividends received from other companies and profits on the sale of shares are generally still tax free for Cyprus companies, and the IP box regime continues for qualifying intellectual property.
Deemed dividends are gone
Under the old rules, if a company did not pay out enough of its profits within two years, it was treated as having paid a dividend to its Cyprus-domiciled shareholders, and defence contribution was charged anyway. For profits earned after 31 December 2025 this rule no longer applies, so companies can keep profits in the business without a tax charge on shareholders. Profits from 2025 and earlier still follow the old rules.
Lower tax on dividends
When a company pays dividends to a shareholder who is Cyprus tax resident and domiciled, the special defence contribution is now 5% instead of 17%. Shareholders with non-dom status remain exempt. See our non-dom guide. GeSY health contributions may still apply up to an annual cap.
Interest and rental income received by individuals are no longer subject to defence contribution at all and are now taxed only under income tax.
No more stamp duty
The Stamp Duty Law was repealed from 1 January 2026. Share purchase agreements, loan agreements, leases and other contracts signed from that date no longer need to be stamped, which removes a cost and a step from many transactions.
Losses, deductions and incentives
- Tax losses can be carried forward for seven years.
- Research and development: an extra 20% deduction on qualifying spending is extended to 2030.
- Entertainment expenses are deductible up to the lower of 1% of turnover or €30,000.
New deadlines and stricter enforcement
- The corporate tax return is now due 13 months after the year end. For the 2026 tax year that is 31 January 2028.
- The final tax payment is due by the same deadline.
- Administrative penalties are higher, and the Tax Commissioner has new powers to collect unpaid tax.
- Directors can remain liable for the company's tax obligations even after they resign.
Changes for individuals
- The tax-free threshold for personal income tax rose to €22,000 a year.
- Gains on crypto assets are taxed at a flat 8%.
- Approved employee share option schemes can be taxed at 8%.
- Non-doms can extend their status beyond 17 years by paying a lump sum.
Is Cyprus still a good place for a company?
Yes, for most founders. A 15% rate is still low by EU standards, profits can now stay in the company without deemed dividends, dividends cost less to take out, and stamp duty has gone. With an EU legal system, English-language business and a wide network of tax treaties, Cyprus remains one of the most practical EU locations for a small or medium-sized company. See our guide to the yearly cost of running a Cyprus company.
Tax law changes and every case is different. Speak to a tax adviser about your own position before making decisions.
How CyCorporate helps
We set up your Cyprus company, register it for tax and VAT, and keep it compliant every year under the new rules. See our company formation service and tax registration service, or ask for a fixed quote below.
Frequently asked questions
What is the corporate tax rate in Cyprus in 2026?
From 1 January 2026 the corporate income tax rate in Cyprus is 15%, up from 12.5%. It is still one of the lowest headline rates in the EU.
Is the deemed dividend distribution rule gone?
Yes, for profits earned after 31 December 2025. Companies no longer have to treat part of their profits as paid out to Cyprus-domiciled shareholders. Profits from earlier years still fall under the old rules.
How much tax is due on dividends in Cyprus now?
For shareholders who are Cyprus tax resident and domiciled, the special defence contribution on dividends fell from 17% to 5%. Shareholders with non-dom status are generally exempt. GeSY health contributions may still apply.
Is there still stamp duty in Cyprus?
No. The Stamp Duty Law was abolished from 1 January 2026, so contracts and other documents no longer attract stamp duty.
Do I need to change anything in my existing company?
Usually nothing changes in the company's documents, but budgets, tax payments and dividend plans should be reviewed. Speak to us or your tax adviser about your own situation.
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