The Cyprus Tax Reform coming into effect on 1 January 2026 introduces significant updates impacting both individuals and businesses. The reform aims to modernise the tax system while maintaining Cyprus’ attractiveness as an international business hub.
Below is a summary of the most important changes.
Key Changes for Individuals
Increased Tax-Free Threshold
The tax-free threshold increases from €19,500 to €22,000, providing relief to lower and middle-income earners.
Revised Income Tax Bands
Income tax bands have been adjusted, with higher thresholds before higher rates apply.
New Personal Allowances
New deductions are introduced, including:
- €1,000 – €1,500 for dependent children
- Up to €2,000 for housing costs
- Up to €1,000 for green investments (e.g. EVs, energy upgrades)
- Up to €500 for home insurance
These measures aim to support households and encourage sustainability.
Key Changes for Businesses
Corporate Tax Increase
Corporate income tax increases from 12.5% to 15%, aligning Cyprus more closely with international tax trends.
Enhanced Deductions
- R&D super-deduction extended until 2030
- Entertainment expenses are deductible up to €30,000
- IPO expenses now deductible up to €300,000
Loss Carry Forward
Companies can now carry forward tax losses for 7 years instead of 5, improving tax planning flexibility.