Cyprus tax in 2026: what the reform changed for individuals, companies and foreign buyers

Most of what is written online about Cyprus tax describes the country as it was until the end of 2025. Parliament passed a reform package on 22 December 2025, the laws were gazetted on 31 December, and the main provisions took effect on 1 January 2026. The headline number everyone quotes — 12.5% corporation tax — is no longer the rate.

Every figure below is the position as at 24 August 2026 and includes the amendments that landed after the reform itself.

What changed, in one table

What you pay when you buy

VAT: 19%, or 5% on a home you live in

The standard rate is 19%. On a new home the buyer will occupy themselves, a reduced rate of 5% applies — but not to the whole purchase.

Under Law 42(I)/2023, in force since 16 June 2023, the 5% rate covers the first 130 m² of covered area and the first €350,000 of value, provided the property as a whole stays within 190 m² and €475,000. Go over either ceiling and the entire transaction is taxed at 19%, not just the excess.

The other conditions: the home must be new, the buyer must use it as their main residence for at least ten years, and the relief is available once per person.

VAT is paid to the developer with the staged payments; the buyer claims the reduced rate from the Tax Department themselves. You can run the numbers on a specific apartment with the calculator on the home page, and the same breakdown sits on every unit in the catalogue.

The older, more generous VAT rule is still alive — until the end of 2026

This is the part most guides miss. Before 2023 the rule was different and better: 5% on the first 200 m² of buildable area, with no price ceiling and no overall size ceiling at all. It survives for some properties under transitional provisions, and Law 109(I)/2026 of 24 April 2026 extended those provisions to 31 December 2026.

The condition is about permit dates: the planning permit application was submitted, or the permit issued, by 31 October 2023, and the building permit was issued after 1 January 2025 or has still not been issued by the end of 2026. Where the building permit was issued by 31 December 2024, the window was shorter and closed on 15 June 2026.

On an expensive apartment the difference between the two regimes runs into tens of thousands of euros, so it is worth asking the developer for the permit dates on the specific unit: they either fall inside the window or they do not. From 1 January 2027 only the 42(I)/2023 regime remains.

Transfer fees: usually nothing on a new build

The Land Registry charges transfer fees on a sliding scale when title is registered in your name: 3% on the first €85,000, 5% from €85,001 to €170,000, 8% above that.

Two things qualify that. Where VAT is charged on the sale, no transfer fees are payable at all — on a new build bought from a developer, that is the normal case. Where VAT is not charged (a resale), the fees are reduced by half, so the rates you actually pay are 1.5%, 2.5% and 4%.

Stamp duty: gone

Until the end of 2025 a sale contract attracted stamp duty at 0.15% between €5,001 and €170,000 and 0.20% above that, capped at €20,000 per contract. The Stamp Duty Law was repealed by Law 239(I)/2025 with effect from 1 January 2026, with no carve-out for property. Contracts signed on or after that date carry none. Contracts signed up to 31 December 2025 stay under the old rules even if completion happens later.

What counts as a "new" building changes on 1 September 2026

Decrees 102/2026 and 103/2026 of 27 February 2026 replace the test for whether a supply of a building is subject to VAT. The old test was time-based: taxable within five years of completion unless the building had been used continuously for 24 months. The new test turns on first occupation — a supply before first occupation is taxable, one after it is exempt, and "first use" means systematic use for at least 18 months. It takes effect on 1 September 2026. For a straightforward new build from a developer nothing changes; for resales and for buildings that stood empty, the answer to "is this sale with VAT or without" can now come out differently.

What you pay while you own

There is no annual property tax. Immovable Property Tax was abolished on 1 January 2017 and has not returned.

What remains is local: refuse collection, street lighting and a sewerage board levy, billed by the municipality on long-outdated assessed values. For an apartment this is typically a few hundred euros a year.

If you claimed the 5% VAT rate, the ten-year commitment has teeth. Sell, let or otherwise stop using the home as your main residence before ten years are up and part of the relief goes back to the state, pro rata: VAT saved × (10 − years lived there) ÷ 10. Five years in means repaying half. You have to notify the Tax Department yourself through the Tax For All portal, and once the amount is settled you may claim the relief again on another property.

What you pay when you sell

Capital gains tax is 20%. It applies to gains on immovable property situated in Cyprus, and to gains on shares in companies where at least 20% of the share value derives from such property — a threshold the reform cut from 50%, which brings a much wider set of share deals into charge. Gains on other shares and securities stay outside CGT entirely.

The reform raised the lifetime exemptions — the amount of gain a person can realise tax-free across their lifetime:

The overall lifetime cap across all headings is €150,000.

A separate levy of 0.4% of the sale proceeds applies on disposals of immovable property, payable by the seller; it funds support for people displaced in 1974.

If you move to Cyprus

Pensions from abroad: 5%

A pension earned from service performed outside Cyprus is taxed at a flat 5% on the amount above €5,000 a year. The threshold was €3,420 until 31 December 2025.

The election is annual: each year you can instead have the pension taxed under the normal bands, whichever leaves you better off. For a moderate pension the normal bands can win outright, because the first €22,000 of income is not taxed at all. Worth recalculating each year rather than settling on the 5% once and forgetting it.

If your pension is a government service pension, a double tax treaty may allocate the taxing right differently. That is a question for an adviser who has read your particular treaty, not a general rule.

Income tax bands

Each rate applies only to the slice of income inside its band. A Cyprus tax resident is taxed on worldwide income; a non-resident only on Cyprus-source income.

From 2026 a return (form TD1) is compulsory for every Cyprus tax resident aged 25 or over, whether or not they have taxable income and whether or not it reaches €22,000. The deadline is 31 July of the following year; for the 2025 return it was pushed out to 31 October 2026.

The defence contribution, and why most incomers pay none

The Special Defence Contribution (SDC) is a separate charge on passive income. It is payable only by people who are both Cyprus tax resident and Cyprus domiciled. Everyone else pays nothing.

The zero in the right-hand column is zero SDC, not zero tax. The GESY health contribution of 2.65% is due on dividends, interest and rents from every Cyprus tax resident whatever their domicile, capped at €180,000 of income — so at most €4,770 a year.

Non-dom status: 17 years out of the last 20

Someone who becomes Cyprus tax resident without a Cyprus domicile is exempt from SDC on dividends, interest and rents. The exemption runs until they have been Cyprus tax resident for 17 years out of the last 20, at which point they are treated as deemed domiciled and pay SDC like anyone else.

What the reform added is a paid extension. Article 3D of the SDC Law, in force from 1 January 2026, lets someone buy a further five years of exemption for a one-off €250,000. It can be taken twice at most — ten extra years for €500,000, or 27 years in total. It is open only to people with no Cyprus domicile of origin. The election is irrevocable and the payment is never refunded.

The Tax Department set out the procedure in Circular 2/2026 of 29 May 2026, which also carried a transitional deadline: anyone who became deemed domiciled in 2024, 2025 or 2026 had to apply by 30 June 2026. That window has closed.

Becoming tax resident: 183 days, or 60

183 days. Spend more than 183 days in Cyprus in a calendar year. Nothing else is required.

60 days. The alternative, for people who move around. All of the following must hold:

1. 01you do not spend more than 183 days in any other single country;
2. 02you carry on business, are employed, or hold a directorship of a Cyprus company — and you own or rent a home in Cyprus;
3. 03you spend at least 60 days in Cyprus in the year.

A fourth condition — that you must not be tax resident anywhere else — was removed on 1 January 2026. That is the change that makes the 60-day route usable for people it previously excluded. The first condition stands: you still cannot spend more than 183 days in any one other country.

Tax residence and the right to live in Cyprus are separate matters under separate legislation. One does not follow from the other, and immigration status is not settled through the tax office.

Coming to work here

The third row is new — Article 8(21B), introduced by Law 17(I)/2026, gazetted on 6 March 2026 with retroactive effect to 1 January 2025. It sits alongside the other two rather than replacing them.

Social insurance of 8.8% and a GESY contribution of 2.65% are withheld from employment income; the employer pays 8.8% and 2.90%. Ceilings for 2026: social insurance €5,742 a month and €68,904 a year, GESY €180,000 of income. Self-employed rates are 16.6% and 4%.

Letting a property, and crypto

Rental income is taxed under the normal bands after a notional 20% deduction for the upkeep of the building, capital allowances and interest on a loan taken to buy it. SDC no longer applies from 2026; the 2.65% GESY contribution does. Since 1 July 2026 rent on Cyprus property may be paid only by bank transfer or card — no cash, whatever the amount.

Gains on crypto-assets are taxed at a flat 8% on sale, gift or exchange. Mined assets fall outside it, and losses can only be set against crypto gains arising in the same tax year.

Taxes Cyprus does not have

• ·No inheritance tax. Abolished on 1 January 2000. Heirs pay nothing on the transfer, resident or not.
• ·No gift tax.
• ·No wealth tax.
• ·No tax on gains from selling shares, bonds or units — that exemption is unconditional. One change is already scheduled: from 1 January 2031 gains on redeeming units in collective investment schemes set up as companies will be treated as dividends.

For companies

Corporation tax is 15% from 1 January 2026, up from 12.5%. The stated reason is the OECD global minimum: holding 12.5% simply meant other jurisdictions collected the difference. Pillar Two rules themselves (QIIR from 31.12.2023, QUTPR from 31.12.2024) apply only to groups with turnover above €750 million.

A Cyprus company is taxed on worldwide income if it is managed and controlled from Cyprus. Exempt from corporation tax: dividends received (subject to participation conditions), profits on disposals of securities (unconditionally), and profits of a foreign permanent establishment (subject to conditions — the exemption no longer covers establishments in jurisdictions on the EU list of non-cooperative jurisdictions). From 2026 all interest income of a company is taxed at 15% and falls outside SDC; the old split between active and passive interest is gone.

A new rule sits alongside: dividends paid to associated companies in low-tax jurisdictions bear withholding tax at 5% (17% for jurisdictions on the EU blacklist), and interest and royalties paid to them are not deductible. Circular 1/2026 of 9 April 2026 names the eleven jurisdictions on the 2026 list.

Reliefs that survived and arrived:

• ·IP box — 80% of qualifying profit from qualifying intellectual property is deducted as a notional expense, leaving an effective rate of 3%. Figures of 2.5% still circulating are computed on the old 12.5% rate. Marketing assets such as trademarks are excluded.
• ·Notional interest deduction on new equity introduced after 31 December 2014, capped at 80% of the taxable profit generated by the activity that equity financed.
• ·Losses carried forward 7 years, up from five.
• ·R&D — a 120% deduction on qualifying spend (an extra 20% on top of the normal 100%), running to 2030.
• ·Agriculture — a 120% deduction on machinery and installations used in farming and livestock production.

The deemed dividend distribution rules, which charged SDC as though a company had distributed profit it had not distributed, are abolished for profits earned from 1 January 2026. They still run out on undistributed 2024 and 2025 profits, through 31 December 2027, and there is a refund mechanism for SDC already paid on earlier profits.

What this means if you are buying an apartment

In the order the deal happens:

1. 01Buying — VAT at 19% or 5% depending on area and price, and possibly still the older 200 m² rule with no price cap if the permits predate 31 October 2023; no transfer fees where VAT applies; no stamp duty at all from 2026.
2. 02Owning — no annual state property tax, only municipal charges. If you took the 5% VAT rate, live there yourself for ten years or repay part of the relief.
3. 03Selling — 20% on the gain, with a lifetime exemption of €30,000 (or €150,000 if it was your main home), plus the 0.4% levy on the proceeds.
4. 04Moving here — non-dom status removes SDC on dividends and interest for 17 years (GESY at 2.65% stays), a foreign pension is taxed at 5% above €5,000, and the 60-day route became easier in 2026. Everyone aged 25 and over files a return.

These are rates, not a calculation of your position. Domicile, the double tax treaty with the country you pay tax in today, the composition of your income and how you receive it move the outcome further than any rate in the tables above. Have it worked out by a tax adviser with Cyprus practice, and before the purchase rather than after.

What we are responsible for is the building, the contract, its registration at the Land Registry, and the VAT figure on your apartment matching the one in your contract. What is available now, and at what price, is in the catalogue.