Cyprus Tax Reform: Changes From 1st January 2026

Welcome to our 5 minute tax update broadcasted monthly. The aim of our tax webcasts is to provide a brief summary of local and international tax events impacting Cyprus.

The Cyprus Tax Department has announced that the 2023 Income Tax return (IR1) for Individuals can now be submitted via the TaxisNet system.

Cyprus corporate tax changed materially on 1 January 2026. The headline change is the corporate tax rate, which rose from 12.5% to 15%. But the reform package went further, touching loss carry-forward..

Cyprus has increasingly positioned itself as a jurisdiction of interest for entrepreneurs, international business owners, remote professionals and high-net-worth individuals seeking an EU base with a modern...

Cyprus removed a key barrier to its 60-day tax residency rule in January 2026, allowing applicants to qualify even if another country still claims them as tax resident. The change shifts the resolution of competing residency claims from domestic statute to double tax treaty tie-breaker provisions, fundamentally altering how internationally mobile business owners and executives can establish Cyprus tax residency.

Cyprus has raised its corporate income tax rate from 12.5% to 15%, but the total tax burden on distributed profits has actually fallen by more than eight percentage points for Cyprus-domiciled shareholders due to a dramatic cut in the Special Contribution for Defence on dividends. However, non-domiciled residents and foreign shareholders now face higher effective rates, fundamentally reshaping the island's tax competitiveness for different investor categories.

Cyprus approved a comprehensive tax reform package on 22 December 2025, marking the first major overhaul of the tax system in more than twenty years.

The Cypriot tax landscape has undergone a significant recalibration following the entry into force of a broad package of fiscal reforms, effective as from the 1st of January, 2026.

Cyprus tax residency has become the subject of intense interest among internationally mobile business owners and entrepreneurs. The reason is straightforward: Cyprus offers a legal, transparent, and well-tested framework...

Cyprus has fundamentally changed how it taxes outbound dividends, interest, and royalties paid to associated companies. Depending on where the receiving shareholder is located, the same payment can now attract 0%, 5%, or 17% withholding tax—or trigger a complete denial of the deduction. Most international groups have not yet reviewed their ownership structures against these new rules, which took effect on 1 January 2026 and apply automatically based on the recipient's jurisdiction.