Cyprus Tax Reform 2026: What Changed — Cyprus
A major tax reform took effect in Cyprus on 1 January 2026 after Parliament approved it on 22 December 2025. The tax-free threshold rose from €19,500 to €22,000, the 20–35% bands moved up, and new deductions arrived for children, rent or mortgage interest and energy efficiency. For investors, SDC on dividends fell from 17% to 5%, deemed dividend distribution was abolished and crypto gains are taxed at a flat 8%. Corporate tax rose from 12.5% to 15%.
Cyprus Tax Reform 2026: What Changed
A major tax reform took effect in Cyprus on 1 January 2026 after Parliament approved it on 22 December 2025. The tax-free threshold rose from €19,500 to €22,000, the 20–35% bands moved up, and new deductions arrived for children, rent or mortgage interest and energy efficiency. For investors, SDC on dividends fell from 17% to 5%, deemed dividend distribution was abolished and crypto gains are taxed at a flat 8%. Corporate tax rose from 12.5% to 15%.
Income tax: before and after
The first €22,000 of taxable income (after social insurance and GESY) is tax-free.
In 2025 the 20% band covered €19,501–28,000.
In 2025: €28,001–36,300.
In 2025: €36,301–60,000.
In 2025 the top rate started at €60,000.
Take-home pay: 2025 vs 2026
Income tax €913 instead of €1,413 in 2025. Contributions: social insurance 8.8% and GESY 2.65%.
Income tax €5,183 instead of €6,168 — about €3,258 a month net.
Income tax €13,445 instead of €15,091. The social insurance cap rose to €68,904 a year, so contributions are slightly higher.
New deductions from 2026
For the first, second and each further child; doubled for single parents. Household income limits: €100,000 (up to two children), €150,000 (3–4), €200,000 (5+).
For your primary residence, per spouse or single person within the income limits (€40,000 for single persons).
Insulation, solar panels, electric vehicles.
Home insurance against natural disasters.
Investment and business
For Cyprus-domiciled residents, on dividends paid out of profits from 2026. Non-doms still pay no SDC.
Companies no longer have to deem-distribute 70% of profits with SDC.
Gains on crypto-asset transactions are taxed at a flat 8% (mining is excluded).
In line with the OECD global minimum tax.
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Non-Dom Status - 17 Years Tax Advantage
Non-Domiciled status is Cyprus's premier tax benefit. Provides 0% tax on dividends and interest for 17 years. Exempt from Special Defense Contribution. Combined with 0% capital gains creates ultimate tax-efficient regime for investors and business owners.
0260-Day Tax Residency Rule
Cyprus offers easiest tax residency in EU: just 60 days physical presence. Much lower than standard 183 days. Perfect for high-earners wanting EU residency without living full-time. Game-changer for international tax planning.
03Progressive Income Tax 0-35%
Cyprus employment and business income taxed progressively. First €22,000 tax-free (2026 tax reform). Top rate 35% only on income above €72,000. Competitive rates. Combined with Non-Dom benefits on investment income creates complete package.
05Investment Income - Dividends, Interest, Capital Gains
Cyprus is paradise for investment income. Non-Doms: 0% dividends, 0% interest. Everyone: 0% capital gains on securities; crypto gains taxed at a flat 8% from 2026. No other major EU country offers this combination. Why wealthy investors flock to Cyprus.
06Corporate Tax & IP Box
15% corporate tax from 2026 (12.5% until 2025). IP Box: 80% exemption = 3% effective rate on IP income. Extensive treaty network. No WHT on dividends out. Premier holding company jurisdiction.