ON 22 DECEMBER 2025, THE CYPRUS PARLIAMENT APPROVED AN EXTENSIVE PACKAGE OF TAX REFORMS AIMED AT MODERNISING THE COUNTRY'S FISCAL FRAMEWORK. THE LEGISLATION WAS PUBLISHED IN THE GOVERNMENT GAZETTE ON 31 DECEMBER 2025 AND ENTERED INTO FORCE ON 1 JANUARY 2026.
The summary below outlines the principal legislative changes introduced under the reform package.
Stamp Duty Law
The Stamp Duty Law has been fully repealed, removing stamp duty on all documents and transactions. This represents a structural simplification of transactional and administrative processes.
Collection of Taxes Law
The Commissioner of Taxation has been granted enhanced enforcement powers, including the ability to pledge a taxpayer's shares where outstanding tax liabilities exceed €100,000.
Assessment and Collection of Taxes Law
The reforms extend director liability beyond resignation, introduce broader individual tax return filing obligations, formalise partnership filing requirements, and revise corporate and employer filing deadlines. The Commissioner may suspend business operations in cases of serious non-compliance, and rent payments are now required to be made electronically.
Income Tax Legislation
The corporate income tax rate has increased from 12.5% to 15%, and tax losses may now be carried forward for up to seven years. Crypto asset gains are taxed at 8%.
Personal income tax bands have been updated, with a top marginal rate of 35%. Revised transfer pricing thresholds apply. Employee and officer share option schemes may be taxed at a flat rate of 8%.
Redemptions of fund units are now treated as dividend income, rather than gains from the disposal of securities, and may therefore be subject to Special Defence Contribution (SDC). The 60-day tax residency rule has been amended by removing the requirement that an individual must not be tax resident elsewhere. All companies incorporated in Cyprus are deemed to be Cyprus tax resident unless a double tax treaty provides otherwise.
Employment Income Provisions
Taxable employment income has been expanded to include inducement benefits, ex gratia payments, termination compensation and early retirement benefits. Amounts exceeding €200,000 in relation to retirement or termination are taxed at 20%.
Research and Development Incentive
A 20% additional deduction is available for qualifying scientific research and research and development expenditure incurred between 2025 and 2030.
Special Defence Contribution
The SDC rate on dividends for Cyprus tax resident and domiciled individuals has been reduced from 17% to 5%, while SDC on rental income and deemed dividend distribution rules have been abolished. The definition of dividend income has been expanded to include capital reductions, liquidations, share redemptions and certain reserve capitalisations. New disguised dividend rules apply where company assets are used privately or transferred to shareholders below fair market value. Additional withholding taxes apply to dividends paid to entities in blacklisted and low-tax jurisdictions, alongside enhanced reporting and payment requirements. Non-domiciled individuals may extend their SDC exemption period, subject to lump sum payments.
Capital Gains Tax
Capital gains tax now applies at 20% to disposals of shares in companies deriving 20% or more of their value from Cyprus immovable property. Updated exemptions apply, including limited relief for disposals of unlisted shares.
Interest Income
Interest income is now taxed exclusively under SDC for individuals and under income tax for companies, aligning the treatment of interest across taxpayer categories.
Next Steps
Affected individuals and entities should review their existing arrangements to ensure ongoing compliance and effective administration. For more information, please read our detailed memo below, or contact your usual Trident Trust representative or our Cyprus office at
cyprus@tridenttrust.com.