Cyprus Corporate Tax Is 15% from 2026: What Company Owners Need to Know
Cyprus introduced a major tax reform from 1 January 2026. One of the headline changes for companies is the increase in the corporate income tax rate from 12.5% to 15%.
For founders and international businesses considering Cyprus, the rate is only one part of the analysis. Tax residence, management, substance, financing, distributions, transfer pricing and the owner's personal tax position can all matter.
The corporate tax rate is now 15%
The Cyprus Tax Department confirms that the corporate income tax rate is 15% from the 2026 tax year onwards.
The former 12.5% rate applied through the 2025 tax year.
Company tax residence changed in 2026
The 2026 reform also amended the definition of a Cyprus-resident company.
Management and control in Cyprus remains an important basis of corporate residence. In addition, a company incorporated in Cyprus is treated as resident in Cyprus unless an applicable double-taxation agreement provides otherwise.
This makes it even more important to consider where the company is incorporated, where its board and decision-making operate and whether another country may also assert residence.
Registration and returns
A company must register in the Cyprus Tax Registry within 60 days of the relevant trigger, including incorporation for a Cyprus company.
From July 2026, relevant legal persons registered with the Registrar submit new tax-registry applications through Tax For All using CY Login.
Company tax returns for tax years from 2026 onwards are moving into the Tax For All system.
Dividends and the 2026 reform
The Special Defence Contribution regime was also changed in 2026. The rate on dividends received by individuals who are subject to SDC was reduced to 5% for distributions out of profits earned from 1 January 2026.
An individual who is Cyprus tax resident but non-domiciled is generally outside SDC on dividend and interest income, subject to the statutory rules.
The corporate and personal tax positions therefore need to be considered together before profits are extracted.
Is 15% the whole tax cost?
No. Depending on the business, VAT, payroll taxes and social insurance, transfer pricing, withholding rules, capital gains and other taxes may be relevant.
Large multinational groups may also have additional international tax obligations.
Legal structure before tax implementation
Tax planning should follow the real commercial structure rather than the other way around. Shareholder rights, director powers, financing, intellectual property, employment and contracts should all align with the intended business model.
Pavlou & Pavlou can advise on the Cyprus legal and corporate structure and coordinate with tax and accounting specialists where specialist tax implementation is required.
Corporate Services: https://www.pavloupavlou.com/corporate-services
Official Tax Department sources: https://www.gov.cy/mof-tax/documents/forologiki-dilosi-eisodimatos-etaireias-t-f-4-aytoergodotoymenoy-me-elegmenoys-logariasmoys-t-f-1/ https://www.gov.cy/mof-tax/en/documents/forologiki-metarrythmisi-2026/
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Updated November 2026. General information only and not tax advice.