The Cypriot government has approved the most ambitious tax reform in 20 years. The changes are aimed at modernizing the taxation system, supporting the middle class, and bringing tax policy in line with EU standards.
The main provisions of the reform will come into force on January 1, 2026, after final approval by the parliament.
Main changes to the tax system in Cyprus
Personal income tax
The tax-free minimum has been increased to €20,500.
A new rate scale has been introduced: up to €30,000 - 20%, up to €40,000 - 25%, up to €80,000 - 30%, over €80,000 - 35%.
Benefits are provided: €1,000 per child, €2,000 for single-parent families, €1,000 per student, €1,500 for mortgage or rental housing.
Corporate Income Tax (CIT)
The rate has been increased from 12.5% to 15% from January 1, 2026. Nevertheless, Cyprus remains one of the most attractive jurisdictions in the EU for corporate structures.
Dividends, rent, cryptocurrencies
The "deemed dividend distribution" (DDD) rule has been canceled for profits after 2026. The rate of the special dividend contribution (SDC) has been reduced from 17% to 5%.
The tax on rental income has been abolished.
A separate rate of 8% is introduced for crypto assets.
Tax administration
Tax losses can be carried forward for 7 years instead of 5.
Digitalization of reporting is being introduced, control and transparency of financial transactions are being strengthened.
What the changes mean for business and investors in Cyprus
The increase in CIT to 15% does not change the status of Cyprus as a jurisdiction with additional corporate taxes within the EU.
Reduced rates on dividends and rent create favorable minds for corporate structures and international holdings.
New benefits for physical persons stimulate the development of the labor and investment sectors.
For IT businesses, the reform opens up opportunities for increased investment in R&D, green initiatives and digital innovations.
For crypto-projects, Cyprus is introducing a vision of competitive regulation, which could become an important advantage in 2026.
Maira Consult provides full legal support to companies registered in Cyprus or planning to enter the Cypriot market.
