What changed in the 2026 Cyprus tax reform?
From 1 January 2026, corporate tax rose to 15%, SDC on dividends fell to 5%, deemed dividend distribution was abolished for new profits, SDC on rents and stamp duty were abolished, and losses can be carried forward 7 years.
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Detailed Explanation
## Headline changes
The reform was voted on 22 December 2025 and took effect on 1 January 2026. Corporate income tax rose from 12.5% to 15%. Special Defence Contribution on actual dividends to Cyprus tax-resident and domiciled individuals fell from 17% to 5%. Non-domiciled residents remain exempt.
## Deemed distribution
The deemed dividend distribution regime is abolished for profits earned from 2026. It still applies to undistributed 2024 and 2025 profits until 31 December 2027.
## Other abolitions and additions
SDC on rents is abolished for everyone, and stamp duty is abolished for documents from 1 January 2026. SDC on passive interest remains 17%. Losses can be carried forward for 7 years, extended from 5. Crypto-asset profits are taxed separately at 8%.
## Personal tax
Personal income tax bands widened from tax year 2026. All Cyprus tax residents aged 25 to 70 must now file a return regardless of income, through the Tax For All portal.
## Why sources disagree
Most older sources, including professional-firm summaries, still show the pre-2026 figures. Treat any rate you remember from before 2026 as suspect and check the date.
## What Finn does
Finn applies the 2026 rules by default, keeps the old rates for earlier periods, and flags trapped 2024 and 2025 profits for planning.
Source: https://www.gov.cy/taxreform/forologika-ofeli-gia-epixeiriseis-nomika-proswpa/
Real-World Examples
Director taking a dividend
A domiciled resident director takes a €10,000 dividend out of post-2026 profits. SDC at 5% is €500, where the old rate would have been €1,700.
Trapped 2025 profits
A company holds undistributed 2025 profits, which stay in deemed distribution until 31 December 2027.
New contract
A business signs a contract in 2026 and pays no stamp duty.
Common Mistakes to Avoid
- Quoting pre-2026 rates
- Assuming deemed distribution ended for all profits
- Forgetting 2024 and 2025 profits are still in scope until 31 December 2027
- Missing the personal filing duty for residents aged 25 to 70
Frequently Asked Questions
What is the new corporate rate?
15%, up from 12.5%.
What is the dividend SDC rate now?
5% for domiciled residents, down from 17%.
Is stamp duty still charged?
Not on documents from 1 January 2026.
What happened to SDC on rents?
It is abolished for everyone.
What is the crypto rate?
Crypto-asset profits are taxed separately at 8% on net profit.
Practical Tips
- Check the date on every source
- Plan distributions of 2024 and 2025 profits before 31 December 2027
- Review salary against dividend mix for 2026
- Keep acquisition and disposal records for crypto-assets
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