Useful Information

Cyprus has implemented a comprehensive tax reform effective 1 Jan 2026. 

Cyprus has implemented a comprehensive tax reform effective 1 Jan 2026. 

Key changes include:

Companies

• The corporate tax will increase from 12.5% to 15% in line with OECD standards 
• The carry-forward period for tax losses will be extended to 7 years, up from previously 5 years.

Companies will continue to enjoy 0% capital gains tax on sale of securities. As a result, the increase in corporation tax will only effect companies with taxable income, such as interest income, rental income and operational income.

Individuals

• The non-dom status may be extended beyond 17 years, for up to two additional five year periods, subject to the payment of a lump sum of EUR 250,000 per period.
• The tax free income treshold for individuals will increase to EUR 22,000 per year.
• All tax residents will be required to file an income tax return regardless of income level.

The Abolition of SDC on Rental Income in Cyprus

Cyprus has taken an important step toward simplifying its tax system with the abolition of the Special Defence Contribution (SDC) on rental income, effective from January 1, 2026. This change removes an extra charge that applied specifically to property rents and had long been seen as unnecessary and confusing.

Under the previous rules, rental income was subject not only to normal income tax but also to SDC, calculated separately. From the implementation of the new reform, rental income is no longer subject to SDC and is taxed only through the standard income tax system.

Rental income is now treated more consistently, without special surcharges. The removal of SDC also reduces the overall tax burden associated with property ownership and investment.

This reform supports a more transparent and predictable tax environment. By eliminating SDC on rent, Cyprus improves its attractiveness to both local and international property investors while encouraging long-term investment in the housing market.

The abolition of SDC on rental income is a positive reform that simplifies taxation, reduces complexity, and reflects a more modern approach to property income in Cyprus.

ATAD lll

After over three years of negotiations, the EU Council has formally abandoned the proposed Unshell Directive (ATAD III), which aimed to combat tax avoidance through shell entities. The decision was confirmed in ECOFIN Report 9960/25, issued on 18 June 2025.

Abolishment of annual levy

On the 21st of February 2024, the Parliament voted to abolish the annual levy of EUR 350 for Cyprus entities, effective from 2024. Entities that have already paid the annual levy for 2024 will be refunded.

Suspension of access to the Beneficial Owner register

The Registrar of Companies has announced that, following the landmark ruling of the Court of Justice of the European Union, access to the Beneficial Owner register for the general public is suspended as of 23rd of November 2022.

The Court argued that the 5th AML directive giving access to the information on the beneficial ownership of legal entities to any member of the general public is invalid and constitutes interference with the fundamental rights of respect for private life and to the protection of personal data. As a result only, competent authorities may now access the register.

Tax incentives –  up to 50% tax exemption on remuneration from employment in Cyprus

In the 26th of July 2022 Cyprus amended the Income Tax Law and introduced tax exemptions of 50% or 20% on remuneration for individuals relocating to take up employment in Cyprus.

This new scheme has been introduced as facilitating the headquartering of foreign businesses to Cyprus and the relocation of talented, high-skilled employees and their families to Cyprus,

The tax exemptions for taking up employment in Cyprus is 50% or 20% on the remuneration based on certain criteria:

• 50% tax exemption on remuneration for the first employment in Cyprus for an individual that:
  • was resident outside Cyprus for ten consecutive years prior to taking up employment in Cyprus
  • was employed in Cyprus after 1^st of January 2022
  • the remunerations from employment exceeds EUR 55,000 each tax year.

The tax exemption is granted for a period of 17 years.

• 20% tax exemption, or EUR 8,550, whichever is the lower, for remuneration for the first employment in Cyprus for an individual that:
  • was resident outside Cyprus for three consecutive years prior to taking up employment in Cyprus
  • was employed in Cyprus after 26^th of July 2022 and before the 31^st of December 2027.

The tax exemption is granted for a period of 7 years.