What actually happened
On 22 December 2025 the Cypriot parliament voted six amending laws. They were published in the Official Gazette, First Supplement No. 5070, on 31 December 2025 and apply from 1 January 2026:
- 239(I)/2025 — repeal of stamp duty
- 241(I)/2025 — tax collection
- 242(I)/2025 — capital gains tax
- 243(I)/2025 — assessment and collection of taxes
- 244(I)/2025 — income and corporate tax
- 245(I)/2025 — special defence contribution
This is enacted law, not a proposal. Anything you read describing these as “planned” predates 31 December 2025.
Companies: the headline rate
Corporate income tax is 15%, up from 12.5%. Two knock-on effects are worth knowing:
- The IP box was not changed in substance, but because it exempts 80% of qualifying profit, its effective rate rises from 2.5% to 3%.
- The notional interest deduction was not touched either, which makes it worth slightly more now that the marginal rate is higher.
Losses can be carried forward for seven years, up from five. Here the sources disagree and we are not going to smooth it over: the law text itself replaces “five” with “seven” without conditions, and PwC says seven. KPMG’s US tax alert says “up to 10 years, subject to certain conditions”. We could not find a ten-year rule in the law text.
Two smaller company items: entertainment expenses rise from €17,086 to €30,000 as a deductible ceiling, and the R&D super-deduction of 120% runs to 2030, but cannot be combined with the IP box for the same asset.
Dividends and interest
- Special defence contribution on dividends: 5% for profits arising from 1 January 2026, down from 17%. For Cypriot-source dividends out of profits up to 31 December 2025, the 17% still applies if they are received on or before 31 December 2031.
- Interest: companies are now exempt from the contribution and pay only corporate tax on the net amount. Individuals pay only the contribution — 17%, reduced to 3% for certain government, EU and listed securities — and no income tax. Exempt charitable bodies stay at 17%.
- The contribution on rents is abolished. Rental income is now subject only to income tax; the old effective 2.25% is gone.
Whether the contribution reaches you at all turns on domicile: the detail is in the guide to non-dom.
Deemed dividend distribution, and its long tail
The deemed dividend distribution is abolished for profits from 2026. But it does not simply vanish:
- 70% of 2024 profits are treated as distributed on 31 December 2026 at 17%.
- 70% of 2025 profits are treated as distributed on 31 December 2027 at 17%.
- Profits of 2023 and earlier were caught by the old rule on 31 December 2025 and are not part of the 70% transition.
- On liquidation, profits of the last five years count as distributed, but only to the extent they arose before 31 December 2025.
This applies only to shareholders who are Cyprus tax resident and domiciled, directly or indirectly. There is also a refund claim where profits already taxed under the old rule are later actually distributed to non-residents or Cypriot non-doms.
Stamp duty: gone
Law 239(I)/2025 is short and blunt: the Stamp Duty Laws of 1963 to 2024 are repealed as of 1 January 2026.
The effect shows most clearly at incorporation: cost breakdowns that still add stamp duty on the articles and the share capital are out of date — what the state actually charges for a Cyprus Limited is in the guide to forming a company.
Documents signed by at least one party up to 31 December 2025 remain stampable under the old rules, within 30 days of execution, and from 1 April 2026 those legacy cases run through Tax For All. One case is openly unresolved, and PwC says so explicitly: documents created before 2026 where the duty had not yet arisen — for instance because the document was only brought into Cyprus later.
Individuals: the new bands
- 0% to €22,000
- 20% from €22,001 to €32,000
- 25% from €32,001 to €42,000
- 30% from €42,001 to €72,000
- 35% above €72,000
Because of this, the PAYE tables changed in January 2026 — a payroll still deducting on the 2025 tables is deducting too much. The details are in our Cyprus payroll contributions and PAYE.
New deductions, all from tax year 2026 and all from the Tax Department’s own guide:
- Children, per parent: €1,000 for the first dependent child, €1,250 for the second, €1,500 for the third. Doubled for single parents — the official example shows €7,500 for three children.
- Income limits on those child deductions: gross family income of €100,000 for up to two children, €150,000 for three or four, €200,000 for five or more; €40,000 for a single person.
- Housing: up to €2,000 for interest on a serviced home loan or rent for a main residence in Cyprus. The rent has to be paid electronically.
- Green transition: up to €1,000 a year for energy renovation of a main residence, solar and storage, or buying an electric vehicle — with unused amounts carried forward for four years.
- Up to €500 for insuring a home against natural disasters, and up to €50,000 for donations to approved cultural institutions.
These new deductions sit on top of the old one-fifth ceiling for premiums, GHS and fund contributions rather than inside it, and are claimed on form T.D.59A.
Crypto-assets at 8%
Gains from the sale, gift, exchange or use as payment of crypto-assets within the meaning of Regulation (EU) 2023/1114 are taxed at a flat 8%. Mining profits are not covered by the flat rate, and losses can only be offset against gains of the same kind in the same year.
Capital gains on unlisted shares
Gains from shares listed on a non-regulated market come into the capital gains net from 2026, above €50,000 per year. Shares held on 31 December 2025 that were listed on a non-regulated market at that date stay exempt regardless of sale value — a grandfathering rule that rewards checking what you held at year end.
Deadlines, records and thresholds
Law 243(I)/2025 changed the administrative machinery, and these are the parts that touch every company:
- Corporate return T.D.4: from tax year 2026, due by 31 January of the second following year instead of 31 March. First application is tax year 2026, due 31 January 2028. The self-assessment payment moves to the same date, from 1 August of the following year.
- Audited accounts threshold: from €70,000 to €120,000 of turnover, from tax year 2026.
- Record retention: six years from the filing deadline or the filing itself, rather than from year end. The assessment window is likewise six years from filing.
- Electronic rent payment becomes compulsory from 1 July 2026: cash rent is no longer deductible.
- From 1 January 2027, closure and sealing of a business for filing failures applies only to failures arising from that date.
- One provision waits until 1 January 2031: treating buy-backs and redemptions of units in open and closed-ended investment companies as dividends.
Our every Cyprus tax deadline lists all of these next to the monthly and quarterly obligations.
What did not change
Being precise about this matters as much as listing the changes:
- The non-dom regime stays in its core, with the 17-in-20-years rule. What is new is an option to extend the contribution exemption by up to two five-year periods against a prepayment of €250,000 each, applied for by 30 June of the first year of the period, irrevocable, and lost retroactively if not paid.
- The 60-day residence rule was loosened: the condition of not being tax resident in another state was deleted.
- The 50% exemption for incoming employees above €55,000 appears untouched — but be aware this is a negative finding from reading the law text, not an official confirmation.
- Pillar Two, the global minimum tax, is not part of this reform. It came in separately through Law 151(I)/2024, gazetted on 18 December 2024, for groups above €750 million of consolidated turnover, with a 15% minimum effective rate. The corporate increase to 15% is often explained as alignment with that framework.
What we could not confirm
- Loss carry-forward: seven or ten years. The law text and PwC say seven; KPMG’s US alert says up to ten with conditions. We follow the law text.
- A €22,000 turnover threshold for provisional tax, widely quoted, does not appear in any of the six laws. €22,000 is the personal tax-free threshold. We corrected our own deadline article on this point.
- The 50% expatriate exemption being unchanged rests on the absence of an amendment, not on a statement.
- The stamp duty residual case described above is expressly unresolved.
Why this matters for your bookkeeping
A reform of this size is mostly a one-off adjustment — new rates, new tables, new deadlines. What it exposes is how many places those figures live. If your VAT treatment sits on individual invoices, your payroll in a spreadsheet and your deadlines in someone’s head, each change has to be found and applied in every one of them.
Volk Accountant keeps the Cypriot treatment on the client record and the figures in one place, so a rule change is a change in one setting. See how Cypriot VAT is handled in the product.