The headline: 15% corporate tax
If you have researched Cyprus recently, you have probably seen conflicting numbers — half the internet still says 12.5%. That era ended on 22 December 2025, when the House of Representatives passed a reform package amending six core tax laws, effective from 1 January 2026. Advisors quoting the old figures are working from an old map.
The corporate income tax rate rose from 12.5% to 15%, aligning Cyprus with the OECD global minimum tax framework. Context matters: at 15%, Cyprus remains well below Germany at roughly 30%, France at 25%, and the Netherlands at 25.8%. Within the EU, it is still one of the most competitive standard rates available — now with the legitimacy of full OECD alignment, which makes structures easier to defend, not harder.
Abolished outright
- Deemed dividend distributionUndistributed profits no longer taxed as if paid out — retain and reinvest freely, for profits from 2026 onwards
- Stamp dutyCorporate documents and contracts freed of a line item that touched nearly every transaction
- SDC on rental incomeOne tax fewer for property investors, domiciled or not
Cut or improved
- Dividend SDC: 17% → 5%The single most commercially important change — the combined burden on distributed profits went down, not up
- Loss carry-forward: 5 → 7 yearsMeaningful for founders funding growth through early losses
- Tax-free threshold: €19,500 → €22,000With wider bands above; the 35% top rate now starts at €72,000 instead of €60,000
The transitional trap most summaries miss
One detail deserves attention if you already have a Cyprus company: the 5% dividend rate applies to profits earned from 1 January 2026 onwards. Dividends distributed out of profits earned up to 31 December 2025 remain subject to the old 17% rate if paid out by the end of 2031.
The sequencing of distributions over the next few years is a genuine planning decision, not an afterthought. This is a conversation to have with your accountant before your next distribution, not after.
If you're relocating personally: the regime held
For individuals considering the move, the reform's most important feature is what it preserved. The non-dom regime survived intact: new tax residents who are not Cyprus-domiciled pay no defence contribution on dividends and interest for 17 years — and the reform introduced a route to extend the status beyond that horizon, which I unpack in the non-dom guide. Combined with the 5% domiciled rate now sitting behind it, Cyprus signalled clearly that investor-residents remain welcome.
The 50% employment income exemption for new residents earning above €55,000 continues, and the 60-day tax residency rule — Cyprus's signature offering for internationally mobile founders — was refined rather than restricted. New targeted deductions for families, primary-residence financing, and energy upgrades were added, subject to income conditions. And the fundamentals did not move: no inheritance tax, no wealth tax, no tax on gains from shares and securities.
What this means in practice
If you are considering Cyprus: the case got stronger. A defensible OECD-aligned corporate rate, a 5% dividend rate, an intact non-dom regime, and lighter personal bands is a combination hard to match anywhere in the EU — the corporate mechanics are mapped in my company relocation guide.
If you already have a Cyprus structure: this is the year to review it. Distribution timing around the 2025/2026 profit boundary, the end of DDD, and the new deductions all reward a deliberate look at how your company and your personal position fit together under the new rules. Either way, the worst position is running 2026 decisions on 2025 assumptions.
Primary references: KPMG Flash Alert on the Cyprus Tax Reform · Cyprus Mail on the new personal taxation regime. This article is general information, not legal or tax advice — confirm your position with a licensed tax advisor.