ATB Advisors Ltd

The standard corporate tax rate rises from 12.5% to 15%. The effective tax rate under the IP Box rises from 2.5% to 3%.

The individual tax-free threshold increases from €19,500 to €22,000. Revised bands:

The period for carrying forward tax losses is extended from 5 to 7 years.

New provisions introduce a flat 8% tax rate on share option schemes, subject to specific conditions.

The requirement for a person to not be tax resident in another jurisdiction is removed from the 60-day tax residency rule.

Corporate tax residency is now determined by place of incorporation, without the condition of non-residency in another state, unless overridden by a Double Tax Treaty.

Lump sums exceeding €200,000 for retirement, job termination, or appointment are subject to a flat 20% tax rate.

Subject to income level, individuals may now claim deductions for:

• Dependent children and university students
• Mortgage interest or rent for main residence
• Insurance against natural disasters on residence
• Energy efficiency expenses
• Purchase of electric vehicles

The deductible cap for entertainment-related business expenses increases to €30,000 (from €17,086).

A 20% additional deduction is available on qualifying R&D and scientific research costs incurred from 2022–2030.

Intangible assets with indefinite useful lives may be amortised over a maximum of 20 years.

From 1 January 2031, net proceeds from the redemption of units/shares in collective investment schemes by individuals will be treated as dividends.

The minimum tax previously applicable to insurance companies is abolished.

As part of the “Brain Gain” initiative, Cyprus has introduced a new income taxincentive aimed at attracting highly skilled professionals and Cypriot expatriates to relocate (back) to Cyprus. The incentive offers a significant exemption on employment income for qualifying individuals who take up employment in Cyprus, strengthening the island’s position as a talent hub.

Qualifying individuals who relocate to Cyprus for employment benefit from a significant exemption on employment income. The exemption applies for a defined period following the commencement of employment in Cyprus.

The incentive targets individuals who were previously non-residents of Cyprus and who take up first-time employment or return to employment in Cyprus after an extended period abroad. Specific eligibility criteria apply.

Particularly relevant for employers seeking to attract international talent and for Cypriot professionals considering a return home. Contact ATB Advisors Ltd for a detailed assessment of eligibility and tax planning opportunities.

On 27 March 2026, the law amending the Law on Administrative Cooperation in the field of Taxation (Law N. 205(I)/2012) was published in the Official Gazette of the Republic of Cyprus and entered into force. The Law transposes EU Directive 2023/2226 of 17 October 2023 (DAC8) into domestic law and is broadly aligned with the provisions of the Directive.

The Law introduces mandatory due diligence and reporting obligations on Crypto-Asset Service Providers (CASPs) and Crypto-Asset Operators. This establishes a framework for automatic exchange of crypto-asset information with EU tax authorities.

The existing obligations of Financial Institutions under the Common Reporting Standard (CRS) are extended in scope, broadening the categories of financial information subject to automatic exchange.

A new framework is introduced for the automatic exchange of certain advance cross-border rulings granted to high-net-worth individuals, increasing transparency for complex international tax arrangements.

The SDC rate on dividends for Cyprus-domiciled individual residents is reduced from 17% to 5%.

SDC on rental income is eliminated. Rental income continues to be subject to income tax.

These provisions no longer apply to corporate profits earned from 1 January 2026.

Dividends distributed from profits up to 31 December 2025 remain taxed at 17% for Cyprus-domiciled individual residents.

Any capital reduction represented by property distributions will be subject to tax on the difference between the market value and the amount originally paid in.

Share capital increases through bonus issues will be treated as dividends.

A new flat 10% tax applies to private use of company assets by shareholders or the undervalue disposal of company assets to shareholders or connected persons.

The 17-year exemption may be extended through a €250,000 lump sum for each additional 5-year period (i.e. €50,000/year, for up to 10 more years).

The withholding rate of SDC on interest from EU government bonds and Health Insurance Fund deposits is reduced to 3%.

A 17% withholding tax is imposed on gross dividends paid to companies in blacklisted jurisdictions.

A 5% withholding tax is imposed on dividends paid to companies in low-tax jurisdictions.

Fines and penalties for non-compliance have increased.

Amended to include shares deriving 20% (previously 50%) of their value from immovable property situated in Cyprus.

Higher exemption limits for disposals of immovable property, agricultural land, and main residences.

CGT exemption for Nea Agora shares abolished for newly listed firms. Exemption now applies only to shares on a regulated market of a recognised Stock Exchange.

An annual €50,000 exemption applies for gains on non-regulated market shares.

These transactions are now exempt from CGT.

Penalties and fines have been substantially increased.

The Stamp Duty Law is abolished entirely. No stamp duty is payable on any documents or transactions going forward.

A flat 8% income tax rate on profits from the disposal of crypto assets, effective 1 January 2026.

Applies to both individuals and legal persons. Crypto profits are not aggregated with other income.

Aligned with the EU MiCA Regulation. Covers coins, tokens, stablecoins, utility tokens, and many non-security NFTs.

Losses from crypto disposals may only be set off against crypto profits within the same tax year.

Revised thresholds for preparing a local file:

Simplified documentation for transactions below thresholds remains in effect.

Authority to pledge taxpayer-owned shares if outstanding tax exceeds €100,000. May also suspend operations for persistent non-compliance.

All tax-resident individuals aged 25–71 must file a personal tax return, even with no income. All individuals with income must file regardless of age.

Remains 6 years, but now starts from the date of return submission (not year-end).

Raised from €70,000 to €120,000 annual gross income for sole traders.

Directors remain liable for actions during their term, even after resignation.

Due by 31 January, 13 months post tax year-end (previously 15 months). Payment deadline aligned with return submission.

Set to 31 March following the relevant tax year.

Enhanced requirements for submitting employee-related information on Form TD7.

Partnerships must now submit tax returns.

Increased to 60 days.

Must be made via bank transfer or electronic payment. Cash not allowed.

Now paid four months after the return submission deadline or refund determination.

Non-compliance fines have risen significantly across all areas.