What to resolve first
- Cyprus corporate income tax increased to 15% from 1 January 2026
- The individual tax-free band increased to €22,000 for the 2026 tax year
- Special Defence Contribution on rental income was abolished from 2026
- Existing models should be refreshed before a relocation or restructuring
Why an old Cyprus tax model may now be wrong
Cyprus introduced material tax changes from the 2026 tax year. A comparison prepared under the former 12.5% corporate rate or old individual bands may overstate or misstate the outcome. The right response is not to focus on one changed percentage, but to rebuild the model using the current rules and the person’s actual income mix.
The Ministry of Finance has confirmed the corporate income tax increase to 15% from 1 January 2026. The Tax Department also publishes current filing guidance and updated individual rules.
What changed for companies
The headline corporate income tax rate is now 15%. For an owner-managed company, that is only the first layer of the analysis. Salary, dividends, social insurance, GeSY contributions, deductible operating costs, management and control, and taxation in the country being left can all affect the effective result.
A Cyprus company also needs governance and operational substance that match the business. Incorporation alone does not relocate decision-making or remove obligations elsewhere.
What individuals should review
The individual tax-free amount increased to €22,000 for the 2026 tax year. Filing obligations also changed, and many Cyprus tax residents between 25 and 70 may need to file irrespective of income level. Non-dom treatment remains a separate question from tax residence.
Special Defence Contribution on rental income was abolished from the 2026 tax year, while dividend and interest treatment continues to depend on residence and domicile status. Each income category should be modelled separately.
The planning response
Refresh any pre-2026 comparison, confirm the relevant tax year, and document the assumptions. People moving mid-year should coordinate Cyprus rules with the departure-country position and any treaty tie-breaker analysis.
Official starting points include the Tax Department’s residence and domicile guidance and its current individual return guidance.
Frequently asked questions
Is Cyprus corporate tax still 12.5%?
No. The standard corporate income tax rate increased to 15% from 1 January 2026.
Did Cyprus non-dom status end in 2026?
No. It remains available subject to residence, domicile and current statutory conditions.
Should an older relocation proposal be recalculated?
Yes, if it relies on pre-2026 tax rates, bands or filing assumptions.