Cyprus is undergoing a comprehensive tax overhaul effective January 1, 2026. This reform balances international compliance with aggressive local incentives, reinforcing the island’s position as a premier European business hub.
Corporate Landscape: Higher Rates, Better Terms
While the Corporate Tax rate increases from 12.5% to 15% to align with OECD global standards, the reform introduces several “pro-business” counter-measures:
- Loss Carry-Forward: Extended from 5 to 7 years, providing better long-term financial planning.
- Incorporation Rule: Companies are now automatically deemed tax residents upon incorporation.
- Stamp Duty Abolition: Total removal of stamp duty from 2026 streamlines contract execution and reduces costs.
Personal Taxation and Family Incentives
The new tax framework significantly lightens the burden on middle-income earners and families. The tax-free threshold has been raised to €22,000. The introduction of targeted allowances—such as child credits (up to €1,500 per child), mortgage/rent relief, and “green” investment deductions—creates a highly competitive environment for talent relocation.
Modern Assets: Crypto and Real Estate
Cyprus officially enters the regulated crypto-tax era with a flat 8% tax on gains. This clarity is expected to attract digital asset firms and professional traders. In real estate, the “Antiparoxi” system is abolished for sellers, and lifetime exemptions for Capital Gains Tax (CGT) have been nearly doubled, with the primary residence exemption reaching €150,000.
The Extended Non-Dom Regime
The Non-Dom regime, already one of Europe’s most attractive, can now span up to 27 years. By paying a lump sum of €250,000 per 5-year block, eligible individuals can secure a 0% tax rate on dividends and interest, offering unprecedented long-term certainty for high-net-worth individuals.