ATB Advisors Ltd
Assurance RedefinedCyprus Tax & Regulatory Updates
Key legislative changes affecting individuals, companies, and investors — curated by ATB Advisors Ltd.
Income Tax 2025 Personal Tax Returns (TD1) — Penalty-Free Deadline Extended to 30 November 2026 New
The Cyprus Tax Department has announced that no interest or penalties will be imposed on 2025 personal income tax returns (TD1) of individuals who do not prepare accounts, provided the return is filed and the tax is paid by 30 November 2026.
Overview
On 19 October 2026, the Cyprus Tax Department announced that it will not impose interest or monetary penalties on the 2025 personal income tax return (TD1) of individuals not preparing accounts, as long as the return is submitted and the tax and contributions due are paid by 30 November 2026.
Who It Applies To
Employees, pensioners and other individuals who do not prepare audited accounts and have not yet filed their 2025 tax return.
What You Should Do Now
- Collect your 2025 income statements: salary (IR63), pensions, rental income, dividends and interest.
- Gather supporting documents for allowances, such as life insurance and pension fund contributions.
- Check whether any tax is payable and make sure it is paid by 30 November.
- Submit your TD1 through the Tax For All (TFA) system before the deadline.
How ATB Advisors Can Help
We prepare and submit personal tax returns for employees, self-employed individuals, pensioners and expats, and make sure you claim every allowance you are entitled to. Contact ATB Advisors Ltd at info@atb.com.cy or +357 24817333.
Compliance Registrar of Companies — Strike-Off of Companies with Unpaid Annual Levy from December 2026 New
The Registrar of Companies has announced that from December 2026 it will begin striking off companies that have not paid their annual levy.
Overview
In an announcement reported on 6 October 2026, the Registrar of Companies and Intellectual Property stated that, from December 2026, it will begin deleting from the register companies that have not paid their annual levy, under Article 327(2A)(b) of the Companies Law, Cap. 113.
What This Means
A company that is struck off no longer legally exists. This can affect its bank accounts, contracts and assets, and restoring a company to the register afterwards takes time and money.
What You Should Do Now
- Check that your company’s annual levy has been paid for every year.
- Settle any outstanding amounts before December 2026.
- Make sure your company’s annual returns and beneficial ownership information are up to date with the Registrar.
How ATB Advisors Can Help
Our corporate services team can check your company’s status with the Registrar, settle any outstanding obligations and keep your company compliant going forward. Contact ATB Advisors Ltd at info@atb.com.cy or +357 24817333.
Transfer Pricing Circular 5/2026 — Revised Safe Harbour Rates for TP Simplification Measures
The Cyprus Tax Department has issued Circular 5/2026, updating the safe harbour rates for related-party financing transactions under the simplification measures of Circular 6/2023. The revised rates apply from the 2026 tax year onwards.
Overview
On 12 October 2026, the Cyprus Tax Department (CTD) issued Circular 5/2026, revising the minimum and maximum rates that apply under the simplification measures of Circular 6/2023. These measures are available to persons who are exempt from the obligation to prepare a Cyprus Local File. The new rates apply from the 2026 tax year onwards and will remain in force until next revised.
Revised Safe Harbour Rates
| Type | Transaction | Previous rate | Revised rate |
|---|---|---|---|
| A1 | Back-to-back loans funded by debt, where the Cyprus entity does not control the risks and lacks the financial capacity to assume them | 2.50% | 0.50% |
| A2 | All other back-to-back loans | 2.50% | 2.00% |
| B | Financing to related parties funded from own capital (para. 18, Circular 6/2023) | 10-yr government bond yield of borrower’s country + 3.50% | 10-yr government bond yield of borrower’s country + 2.25% |
| C | Loans payable to related parties, where the funds are used in the business (para. 25, Circular 6/2023) | 10-yr Cyprus government bond yield + 1.50% | 10-yr Cyprus government bond yield + 1.75% |
All rates are stated before the deduction of taxes.
Reference Bond Yield
For types B and C, the 10-year government bond yield as at 31 December of the prior calendar year continues to apply. Where a loan is denominated in a currency other than the borrower’s domestic currency, the reference rate is the 10-year government bond yield of that country denominated in the loan currency, provided it is published on the CTD’s website. If no such rate is available, the taxpayer must contact the CTD’s Transfer Pricing Unit to agree the applicable reference rate.
Low Value-Adding Services
The 5% mark-up on costs under the simplified approach for low value-adding intra-group services remains unchanged.
Practical Implications
Groups relying on the safe harbour rates should review their intra-group loan pricing for 2026, as the revised rates may require adjustments to existing agreements and interest calculations. Contact ATB Advisors Ltd for assistance in reviewing your financing arrangements and transfer pricing position.
Transfer Pricing New Financial Transactions Table (FTT) Filing Requirement
From the 2026 tax year, taxpayers whose controlled financial transactions exceed €10 million must submit a new Financial Transactions Table together with the Summary Information Table of Controlled Transactions.
Overview
The Cyprus Tax Department has published the template for a new Financial Transactions Table (FTT). It applies from the 2026 tax year onwards to persons subject to Article 33(7) of the Income Tax Law whose controlled transactions in the “Financial Transactions” category exceed the threshold of Article 33(9).
Threshold
From the 2026 tax year, the Article 33(9) threshold for financial transactions has increased to €10 million.
Filing
The FTT is submitted electronically through the Tax For All (TFA) system, as an attachment to the Summary Information Table of Controlled Transactions (SIT).
Scope
The FTT covers controlled financing transactions priced by reference to an interest rate, such as loans, and receivables and payables of a financing nature. Cash pooling arrangements and explicit guarantees are excluded.
Structure & Template
The table has 28 columns in three parts: (1) the terms of each financing transaction, (2) balances and interest amounts, and (3) benchmarking results. Taxpayers must use the CTD’s official Excel template and guide, which includes automated validation checks. Other file formats and reproduced versions of the template are not accepted.
Quality Assurance Review
According to the CTD’s guide, the FTT must undergo a quality assurance review before submission, in the same way as a Local File.
Practical Implications
Groups with significant intra-group financing should check now whether they exceed the €10 million threshold and start gathering the loan terms, balances and benchmarking data the FTT requires. Contact ATB Advisors Ltd for support with transfer pricing documentation and the preparation and submission of the FTT.
FDI Cyprus Introduces FDI Screening Regime — Key Implications for Transactions
Cyprus has enacted the Establishment of a Framework for the Screening of Foreign Direct Investments Law of 2025 (Law 194(I)/2025), creating a national FDI screening regime effective 2 April 2026. Certain foreign investments into strategically sensitive sectors now require prior approval.
Overview
Cyprus has enacted the Establishment of a Framework for the Screening of Foreign Direct Investments Law of 2025 (Law 194(I)/2025), designating the Ministry of Finance as the competent authority. The law entered into force on 2 April 2026. The new regime introduces a prior approval requirement for certain foreign investments into Cypriot businesses operating in strategically sensitive sectors, meaning some transactions will require FDI analysis at the front end of deal planning.
When Does Mandatory Notification Arise?
A mandatory notification may arise where the investor qualifies as a foreign investor and the following three conditions are met cumulatively: the transaction results in the acquisition of a “special participation” (at least 25% of the share capital and/or voting rights or equivalent decisive influence), the investment value reaches €2 million or more, and the target is an undertaking of strategic importance.
Strategic Importance — Broad Scope
The concept of strategic importance goes beyond traditional defence or utilities cases. It extends to sectors such as energy, transport, water, health, education, tourism, communications, media, data processing and storage, financial services, and critical technologies including artificial intelligence, semiconductors, cybersecurity, biotechnology and other dual-use or sensitive technologies.
Review Process & Timelines
The review process has two main stages. First, the competent authority decides within 20 working days whether the notified investment will be subjected to review. If the matter proceeds to full review, the authority must decide within 65 working days whether the transaction may affect the security or public order of Cyprus. Both time periods may be suspended if further information is requested, and clearance is effective only once written approval is issued.
Authority Powers & Call-in Mechanism
The authority may approve a transaction subject to conditions, prohibit it, terminate it or reverse it. If an investor fails to comply with imposed conditions, the authority may restrict the exercise of rights arising from the investment, including voting, management and control rights. Even where a transaction does not fall within the mandatory filing criteria, the authority may still review it within 15 months of completion. Where a mandatory filing should have been made but was not, the authority may intervene for up to five years after completion.
Penalties
Administrative penalties are material. The law provides for fines for failure to notify, for false or misleading information, for failure to provide information and for non-compliance with measures imposed by the authority, including daily penalties for continuing breaches.
Practical Implications
Cyprus FDI risk now needs to be built into transaction screening, diligence, structuring, SPA conditions precedent, long-stop dates, information requests and regulatory risk allocation. Businesses with live or pipeline transactions should take immediate action. Contact ATB Advisors Ltd for a detailed assessment of how this regime may affect your current or planned transactions.
Income Tax “Brain Gain” Initiative — New Income Tax Incentive for Returning Professionals
As part of the “Brain Gain” initiative, Cyprus has introduced a new income tax incentive aimed at attracting highly skilled professionals and Cypriot expatriates to relocate (back) to Cyprus.
Overview
As part of the “Brain Gain” initiative, Cyprus has introduced a new income tax incentive 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.
Income Tax Exemption
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.
Who Qualifies
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.
Practical Implications
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.
Reporting DAC8 Directive — Cyprus Law Enters into Force
On 27 March 2026, Cyprus transposed EU Directive 2023/2226 (DAC8) into domestic law. The new rules impose mandatory reporting obligations on Crypto-Asset Service Providers (CASPs) and extend the scope of existing CRS obligations, with information automatically exchanged with EU tax authorities.
Overview
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.
Crypto-Asset Reporting
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.
Extension of CRS Obligations
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.
Cross-Border Rulings for HNWIs
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.
Practical Implications
CASPs, financial institutions and businesses with crypto-asset exposure should review their reporting obligations under the new framework. Contact ATB Advisors Ltd for a detailed assessment of how DAC8 affects your compliance position.
Need Guidance on the New Legislation?
Our team is here to help you understand how these changes affect your business or personal tax position.
Income Tax
Special Contribution for Defence (SDC) Tax Law
Capital Gains Tax (CGT) Law
Stamp Duty Law
Crypto Asset Taxation (Article 20E)
Transfer Pricing
Collection & Assessment of Taxes
Compliance & Filing Deadlines
Need Guidance on the New Legislation?
Our team is here to help you understand how these changes affect your business or personal tax position.
Indicative Tax Calendar for Tax Year X
The table uses X for the tax year, X-1 / X-2 for prior years. Replace with the relevant year.
| Obligation | 31/1 | 31/3 | 31/7 | 31/12 |
|---|---|---|---|---|
| Payment of SDC for deemed dividend distribution purposes of [Year X-2] (only for years 2024 & 2025) | ✓ | |||
| Corporate tax return & payment of final tax of [Year X-2] — non-Cyprus tax resident companies with Cyprus-taxable income 1 | ✓ | |||
| Corporate tax return & payment of final tax of [Year X-2] — Cyprus tax resident company | ✓ | |||
| Personal tax return & payment of final tax of [Year X-1] — individuals not preparing accounts 2 | ✓ | |||
| Personal tax return & payment of final tax of [Year X-1] — individuals preparing accounts 2 | ✓ | ✓ | ||
| Personal tax return & payment of final tax of [Year X-1] — non-Cyprus tax residents with Cyprus-taxable income | ✓ | |||
| Submission by employers of total payroll of [Year X-1] (Form TD7) 3 | ✓ | |||
| Payment of first / second instalment of provisional tax for [Year X] 4 | ✓ | ✓ | ||
| Last day for submission of revised temporary tax | ✓ | |||
| Payment of SDC for [Year X] on dividends & interest from sources outside the Republic | Paid by self-assessment by the deadline for the relevant tax return | |||
| Payment of SDC withheld on dividend & interest 5 | End of following month | |||
| Payment of PAYE (tax withheld from employee’s salary) | End of following month | |||
| Payment of tax withheld on payments to non-Cypriot tax residents | End of following month | |||
Notes:
1 A non-resident company whose entire gross income taxed under the ITL has been subject to WHT is exempted from filing a tax return.
2 All individuals between 25 and 71 (inclusive) must submit a personal tax return. Others only need to file if they have taxable income.
3 The TD7 shall include all full-time and part-time employees, employees under contract, pension recipients, and persons to whom a facility or benefit was provided.
4 For companies incorporated/becoming Cyprus tax residents, and individuals that began earning non-emolument income in [Year X], provisional tax shall be submitted and paid by 31 December of [Year X].
5 SDC on dividends from 2024 and 2025 profits shall be paid on 31 December 2028 and 31 December 2029, respectively.
Transitional rule: For pre-2025 tax years, where the filing date was 31 July, the payment deadline remains 31 July following the tax year. Where the filing date was 31 March, the payment deadline becomes 1 August following the tax year.
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