Cyprus’ 2026 tax reform is the most extensive overhaul in decades, reshaping personal, corporate, and property taxation. It introduces a higher corporate tax aligned with OECD rules, generous family‑focused deductions, full abolition of stamp duty, and major changes to capital gains and dividend taxation.
Cyprus Tax Reform 2026 — Full Overview
(Effective 1 January 2026)
1. Personal Income Tax Changes
New Tax-Free Threshold
- €22,000 (previously €19,500)
Revised Tax Bands
| Taxable Income | Rate |
|---|---|
| €0 – €22,000 | 0% |
| €22,001 – €32,000 | 20% |
| €32,001 – €42,000 | 25% |
| €42,001 – €72,000 | 30% |
| Above €72,000 | 35% |
Family & Housing Allowances
(Very relevant for clients buying homes)
Per parent:
- 1st child: €1,000
- 2nd child: €1,250
- 3rd+ child: €1,500
- Rent/mortgage interest: up to €2,000
- EV/green investments: €1,000
- Home insurance: €500
Mandatory Tax Return Filing
- All Cyprus tax residents over 25 must file a return, regardless of income.
2. Corporate Taxation
Corporate Tax Rate
- Increased from 12.5% → 15%
- Aligns with OECD global minimum tax.
Dividend Taxation
- Withholding tax on actual dividends: 5% (down from 17%)
- Deemed Dividend Distribution: Abolished for profits from 2026 onward.
Other Corporate Measures
- Rental income exempt from SDC (only taxed under Income Tax).
- Special rules for crypto‑asset gains.
- R&D super‑deduction (120%) extended to 2030.
- New rules for disguised dividends (10% tax).
3. Property & Real Estate Taxation
Stamp Duty
- Fully abolished from 1 January 2026.
This significantly reduces transaction costs for buyers.
Capital Gains Tax (CGT) — Lifetime Exemptions Increased
| Property Type | New Exemption | Previous |
|---|---|---|
| General | €30,000 | €17,086 |
| Agricultural land | €50,000 | €25,629 |
| Primary residence | €150,000 | €85,430 |
Property Exchange / Antiparoxi (Αντιπαροχή)
- Fully abolished for sellers.
- Owners who exchange their land for a property with a developer have no taxes to pay unless they sell the actual property received in exchange for their land.
This modernizes development agreements and simplifies negotiations.
4. Investment & Incentives
- Defence contribution on interest from CSE‑listed bonds: 17% → 3%
- Incentives for innovation, capital markets, and green transition.
- Notional tax deduction for employers paying Cost of Living Allowance (COLA).
5. Administrative & Compliance Changes
- Mandatory tax return for all residents over 25.
- Strengthened anti‑abuse rules and transfer pricing thresholds.
- Clearer rules on interest income taxation.
- Six laws amended: ITL, SDCL, CGTL, ACTL, CTL, SDL.
1. Income Tax Law (ITL)
Official name: Income Tax Law of 2002 (118(I)/2002)
What changed:
• New personal tax bands
• Higher tax‑free threshold (€22,000)
• New deductions (children, housing, green incentives)
• Corporate tax increased to 15%
• New rules for crypto‑asset gains
• R&D super‑deduction extended
2. Special Contribution for Defence Law (SDCL)
Official name: Special Contribution for the Defence Law of 2002 (117(I)/2002)
What changed:
• Dividend SDC reduced from 17% → 5%
• Deemed Dividend Distribution abolished for 2026 profits
• Rental income exempt from SDC
• New rules on disguised dividends
3. Capital Gains Tax Law (CGTL)
Official name: Capital Gains Tax Law of 1980 (52/1980)
What changed:
• Major increase in lifetime CGT exemptions
• €150,000 for primary residence
• €30,000 general
• €50,000 agricultural
• Updated definition of immovable property
• Antiparoxi (Αντιπαροχή) CGT abolished
4. Assessment and Collection of Taxes Law (ACTL)
Official name: Assessment and Collection of Taxes Law of 1978 (4/1978)
What changed:
• Strengthened anti‑abuse rules
• Mandatory tax return filing for all residents over 25
• Updated administrative and compliance procedures
5. Collection of Taxes Law (CTL)
Official name: Collection of Taxes Law of 1962
What changed:
• Modernised tax collection mechanisms
• Alignment with new compliance and enforcement rules
• Supports the updated ACTL framework
6. Stamp Duty Law (SDL)
Official name: Stamp Duty Law of 1963
What changed:
• Full abolition of stamp duty on all taxable instruments
• Simplifies property transactions and reduces buyer costs
What This Means for Real Estate
These reforms create several strategic advantages:
- €150,000 CGT exemption for primary residences as a major selling point.
- Stamp duty abolition is a strong incentive for high‑value transactions.
- Family‑friendly deductions support your relocation clients.
For Property Buyers
- Lower transaction costs (no stamp duty).
- Higher CGT exemptions make selling primary residences more attractive.
- Family allowances improve affordability for young families relocating to Cyprus.
For Investors
- Lower dividend tax and abolished deemed dividends improve Cyprus’ attractiveness for holding structures.
- Corporate tax increase is modest and aligned with global norms—still competitive.