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.

** Download the 2026 Tax Reform Guide

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