Cyprus officials have described the package as the first comprehensive restructuring of the tax system in more than 20 years. The reform does not simply increase taxes. It reshapes the system by combining a higher corporate tax rate with lower taxes on dividends, broader relief for households, and targeted deductions for priority spending.
Corporate tax rate rises to 15%
One of the main changes is an increase in the corporate tax rate from 12.5 to 15%. This ends Cyprus’s position among the European Union’s lowest corporate tax jurisdictions and brings the country closer to the 15% international minimum tax benchmark.
At the same time, Cyprus reduced the tax burden on distributed profits. The tax on actual dividend payments falls from 17 to 5%, while the deemed dividend distribution system is abolished for profits generated after January 1st, 2026.
Stamp duty is also being eliminated, while the loss carry-forward period is extended from five to seven years.
The reform also includes targeted provisions for businesses and investors. These include favourable treatment for stock options, continued support for research and development, and an 8% tax on gains from cryptocurrency disposals.
Personal income tax brackets revised
For individuals, the reform increases the tax-free income threshold from €19,500 to 22,000. Income above that level will be taxed under revised progressive brackets.
The new personal income tax rates are as follows:
- €0 to 22,000 — 0%;
- €22,001 to 32,000 — 20%;
- €32,001 to 42,000 — 25%;
- €42,001 to 72,000 — 30%;
- above €72,001 — 35%.
Compared to the previous system, the reform raises the tax-free band and shifts the structure in a way that reduces the burden on lower and middle incomes.
New deductions for families, housing, and green spending
The reform introduces several deductions aimed at households. Families will receive allowances of €1,000 for the first child, €1,250 for the second child, and €1,500 for the third and each subsequent child. These deductions are granted per parent, subject to income thresholds.
Cyprus is also introducing new deductions linked to housing and sustainability. These include an annual deduction of:
- €2,000 — for rent or mortgage interest on a primary residence;
- €1,000 — for green expenses, such as energy-efficiency upgrades or the purchase of an electric vehicle;
- €500 — for home insurance against natural disasters.
According to the finance ministry, these measures are designed to support families with children and students, strengthen housing policy, and encourage the green transition.
Cyprus permanent residence for investors
Under the Cyprus permanent residence programme, non-EU citizens can obtain permanent residence by investing at least €300,000 in real estate or securities. The obtaining period is stated as 9+ months.
Cyprus permanent residence allows investors and their families to live in the country indefinitely, with a mandatory visit only once every two years. Permanent residents may benefit from tax incentives and access to the European business market.
