Cyprus tax system and rates in 2026

Cyprus (or "the Republic") runs one of the lower corporate tax rates in Europe. As a member of the European Union, it applies EU rules on company law, competition, finance and governance.

The Cyprus tax system was reformed with effect from 1 January 2026. This guide sets out the rules as they now stand.

General framework

The Cyprus income tax laws apply in the same way to individuals and to companies. A company pays tax on its own income.

Partnerships are not taxed as separate entities. Each partner is taxed on their share of the income. Husband and wife are taxed separately.

The tax year is the calendar year.

Income tax in Cyprus

A person is a resident of Cyprus for tax purposes if, in the tax year, he or she stays in Cyprus:

• For more than 183 days (the "183-day rule"); or,
• For at least 60 days, does not spend more than 183 days in any single other country, keeps a permanent home in Cyprus that they own or rent, and has a live Cyprus economic tie for the tax year through running a business here, holding a job here, or a directorship in a Cyprus tax resident company (the "60-day rule").

Taxable income

A Cyprus tax resident with income above €22,000 a year pays income tax. The personal income tax rates for 2026 are:

Total taxable income	2026 tax rate
Up to €22,000	0%
€22,001 - €32,000	20%
€32,001 - €42,000	25%
€42,001 - €72,000	30%
Over €72,000	35%

A Cyprus tax resident is taxed on worldwide income. A person who is not a tax resident is taxed on Cyprus-source income only.

Types of income taxed

Tax is charged on income from employment, trade or business, rents, royalties, pensions and annuities, and on profits from property held as trading stock. Visiting artists and sportspeople pay 10% on the income they earn in Cyprus.

Foreign pensions

Pension income from abroad can be taxed at a flat 5% on the amount above €5,000 a year, so the first €5,000 is free of tax. The alternative is the normal income tax scale, which can be chosen where it produces a lower bill. The choice is made each year.

Exemptions for people moving to Cyprus for work

A person taking up first employment in Cyprus with pay above €55,000 a year can claim a 50% income tax exemption on that employment income. The exemption runs for 17 years.

To qualify, the person must not have been a Cyprus tax resident, and must not have worked in Cyprus, for at least 15 years in a row before starting the job.

A separate 25% exemption is open to people who come back to Cyprus after working abroad, under the Minds in Cyprus scheme. It is capped at €25,000 a year and runs for seven years. To qualify, the person's employment income or business profits must be above €30,000 a year, and they must not have been a Cyprus tax resident in the seven years before taking up work or self-employment in Cyprus. The two exemptions cannot be combined.

Self-employment

Self-employed people pay social insurance at 16.6% of their income, within the annual lower and upper limits set each year.

Tax is self-assessed. The tax due for the year is estimated by 31 July and paid in two equal instalments, on 31 July and 31 December.

If a self-employed person's yearly income is over €120,000, they must file audited financial statements. The 2026 reform raised this threshold from €70,000.

Employers and employees

Employers and employees each contribute 8.8% of insurable earnings to social insurance, and the state adds 5.2%. These rates have applied since 1 January 2024.

Other income tax points

• Dividends are exempt from income tax.
• Interest received by an individual sits outside income tax and falls under the defence contribution instead.
• Profit from the disposal of securities is exempt.
• A retirement gratuity is free of income tax up to €200,000. Amounts above that are taxed at a flat 20%.

Corporate tax in Cyprus

Corporate tax rate

The standard corporate income tax rate is 15%, raised from 12.5% on 1 January 2026. It stays one of the lower headline rates in the European Union.

Some income sits outside the charge, including dividend income and profit on the disposal of securities.

Reliefs bring the rate a company actually pays below the headline figure. The IP Box regime exempts 80% of qualifying profits from intellectual property, which puts the effective rate near 3%. A notional interest deduction is available on new equity introduced into the company, and the participation exemption covers qualifying dividend income from abroad.

When is a company taxed in Cyprus?

A company is a Cyprus tax resident if it is managed and controlled from Cyprus.

From the 2026 tax year, a company incorporated in Cyprus counts as a Cyprus tax resident by default. The exception is where a double tax treaty places its residence in another country.

A Cyprus tax resident company pays tax on income from everywhere, inside and outside Cyprus.

A company that is not a Cyprus tax resident is taxed on Cyprus-source income and on the profits of a permanent establishment here. The Income Tax Law follows the OECD model definition of a permanent establishment: a fixed place of business through which the business of an enterprise is wholly or partly carried on. It takes in a place of management, a branch, an office, a factory, a workshop, and a mine, quarry or other place of extraction of natural resources.

Filing and payment

Companies file an annual income tax return (form TD4) prepared from audited financial statements.

For tax years up to 2025, the return is due by 31 March of the second year after the tax year. From the 2026 tax year that moves to 31 January, so the 2026 return is due by 31 January 2028.

Tax on rental income in Cyprus

Rental income gets a flat 20% deduction, so 80% of the rent is taxable. That 80% is taxed on the normal income tax scale, plus a General Health System (GeSY) contribution of 2.65%.

The special defence contribution on rental income was abolished on 1 January 2026.

The position in detail:

• Income tax applies where the landlord's total income passes €22,000 a year. The rate follows the scale set out above.
• GeSY at 2.65% is charged on the rent. Companies, partnerships, the Republic and local authorities are outside the GeSY charge.
• A company pays corporate income tax at 15% on its rental profit.
• VAT at 19% is charged on the rent where the tenant is registered for VAT and carries out taxable activities on the premises, and the landlord has not opted out of that treatment.

Special contribution for defence (SDC)

A special contribution for the defence applies to some types of income, such as dividends and interest.

The rate on dividends depends on the year the company profits were earned, not the year the dividend is paid. It is 5% for dividends paid out of profits earned from 1 January 2026 onward. Dividends from profits earned up to 31 December 2025 carry 17%, a transitional rate that runs until 31 December 2031.

Interest is charged at 17%. The rate drops to 3% for interest from government savings certificates and development bonds, and from corporate bonds listed on a recognised stock exchange.

Individuals pay the defence contribution if they are both Cyprus tax residents and domiciled in Cyprus. A person is domiciled here by domicile of origin or domicile of choice under the Wills and Succession Law, or by deemed domicile, which applies after 17 years of Cyprus tax residence out of the 20 years before the tax year in question.

Companies pay it if they are Cyprus tax residents. People who are not Cyprus tax residents do not pay it.

A Cyprus tax resident with no domicile of origin or domicile of choice in Cyprus, who has not yet reached the 17-year mark, is a non-dom and pays nothing on dividends or interest. That exemption is the main draw of the Cyprus non-dom regime.

Non-dom status runs for 17 tax years from the year a person becomes a Cyprus tax resident. The 2026 reform added an option to extend it. A non-dom whose domicile of origin is outside Cyprus can buy a further five years for a lump sum of €250,000 covering the period, and the election can be made twice, so the exemption can run for up to 27 years.

Deemed dividend distribution was abolished for company profits earned from 1 January 2026 onward. Profits earned up to 31 December 2025 stay within the transitional rules.

Property tax in Cyprus

Immovable property tax was abolished on 1 January 2017. Owners now pay an annual municipal tax, set by the municipality on the value of the property, with rates that vary by location. Property outside a municipal boundary carries a community charge in its place.

Transfer fees

The Land Registry charges transfer fees on a sliding scale tied to the value of the property. No transfer fee is due where VAT was charged on the purchase.

Capital gains tax in Cyprus

Capital gains tax is charged only on gains from selling immovable property located in Cyprus. It reaches shares too, but only shares in unlisted companies that draw at least 20% of their value from Cyprus property. The 2026 reform lowered that share test from 50% to 20%.

Gains on other assets, such as most shares and bonds, sit outside the tax.

The rate is 20%. It falls on residents and non-residents in the same way, because what matters is where the property sits, not where the seller lives.

Lifetime exemptions cut the taxable gain. A general disposal has a €30,000 exemption, and a main home qualifies for €150,000 subject to occupation conditions. Farmland sold by an active farmer qualifies for €50,000.

These are lifetime allowances drawn down across disposals, not yearly ones.

Value added tax (VAT)

The standard VAT rate is 19%. Reduced rates of 9% and 5% apply to defined categories of goods and services, and some supplies are zero-rated or exempt.

Registration is compulsory once taxable turnover passes €15,600 in any twelve-month period. The same threshold applies to self-employed individuals, and registration is open voluntarily below it.

VAT returns are filed and paid electronically every quarter.

VAT on property

VAT at 19% is charged on the sale of new property where the building permit was applied for on or after 1 May 2004. A reduced 5% VAT rate for a first primary residence applies within the conditions and area limits set by the law.

General health system (GeSY)

Contributions to the General Health System (GeSY) have been payable since 1 March 2020. Employees and pensioners pay 2.65% of their income, employers pay 2.90% on each employee's pay, and self-employed people pay 4%.

Rents, dividends and interest carry a 2.65% contribution for individuals. Contributions stop once total annual income reaches €180,000.

Payments of tax

Income tax registration is done through the taxpayers' portal, Tax For All (TFA).

VAT registration follows income tax registration and is completed by filing or posting form T.D. 1101. The taxpayer then receives a Tax Identification Code (TIC) and, where it applies, a VAT registration certificate.

Where a VAT form falls due before the tax identification code has arrived, it is filed under the electronic registration number.

The registration steps for individuals and companies are set out at Registering for income tax and VAT - businessincyprus.gov.cy.

The 2026 reform changed several of these rules at once. Our Cyprus tax lawyers can work through how they apply to your own position and handle the registrations, filings and correspondence with the Tax Department.