Cyprus After the 2026 Reform: Is It Still Worth It at 15%?

The number that grabbed the headlines was 15%. When Cyprus lifted its corporate income tax from 12.5%, some founders mentally crossed it off the list — another low-tax haven gone. That is a mistake, and an expensive one. The 2026 reform kept every feature that made Cyprus attractive in the first place, and actually loosened the residency rules around it. This article weighs what genuinely got worse against what stayed or improved, so you can judge Cyprus on the full picture rather than one line on a rate card.

What the Reform Changed — and What It Kept

Cyprus enacted its most comprehensive tax reform in over twenty years, passed on 22 December 2025 and effective 1 January 2026, with the corporate rate rising from 12.5% to 15%. That is the headline, and it is real: every Cyprus company now pays 15%, aligning the island with the OECD global minimum standard.

But a reform is more than its headline number, and this one was notably additive. It kept the IP Box, the notional interest deduction, the participation exemption, the tonnage-tax regime and the non-dom rules, and it extended loss carry-forward to seven years. In other words, the toolbox that did the real work on effective tax rates survived intact; only the base rate moved.

The Features That Still Make Cyprus Competitive

This is where the 2.5-point rise gets put in perspective. The IP Box regime taxes qualifying intellectual-property income at an effective rate of around 2.5% — untouched by the reform. For a business built on software, patents or licensing, that single feature does far more for the tax bill than the headline rate, and it remains one of the most competitive IP regimes in the EU.

Around it sit the other tools. The participation exemption keeps qualifying dividends and gains on shareholdings out of tax, which is why Cyprus remains a favoured holding jurisdiction; the notional interest deduction rewards equity funding; and the network of double-tax treaties keeps cross-border flows efficient. At 15% headline but with these intact, a well-structured Cyprus company’s effective rate can still sit well below its nominal one.

The Relaxed 60-Day Residency Rule and Non-Dom

The reform did not only take; on residency it gave. The non-dom regime still delivers up to 17 years of 0% tax on dividends and interest, extendable via lump-sum contributions of EUR 250,000 — a powerful draw for founders who want to take income personally at low or zero tax. For an owner-manager, that personal layer often matters more than the corporate rate.

The 60-day residency rule also got easier. Under the updated rule, qualifying for Cyprus tax residency on the 60-day basis no longer requires proving that you are not tax-resident anywhere else — removing a practical hurdle that used to complicate the claim. Combined with non-dom status, Cyprus remains one of the EU’s most attractive places for a founder to be personally resident, reform or not.

Who Should Reconsider, and Who Should Stay

Be honest about who the rate rise actually hurts. A plain trading company with no IP, no holding function and no intention of the owner becoming Cyprus-resident feels the full 2.5 points and gains little from the surviving features — for that profile, a flat-10% Bulgaria may now be cheaper, and it is worth a look. The reform genuinely narrowed Cyprus’s edge for the most vanilla use case. If you consider some other jusrisdiction and want to stay in EU check our article.

Everyone using Cyprus for what it is good at should stay put. IP-heavy businesses, holding companies, groups needing treaty access, and founders who want the non-dom personal regime still get a package no flat-rate jurisdiction matches. For them, 15% on the base rate is a rounding error next to a ~2.5% IP Box and 0% personal tax on dividends. Judge Cyprus on the whole structure, and the reform changes far less than the headline implied.

FAQ

Did Cyprus raise its corporate tax in 2026?

Yes. The corporate income tax rose from 12.5% to 15%, effective 1 January 2026, under a reform enacted on 22 December 2025 to align with the OECD global minimum standard.

Did the reform remove the IP Box or non-dom regime?

No. The reform kept the IP Box (~2.5% effective on qualifying IP), the notional interest deduction, the participation exemption, the tonnage-tax regime and the non-dom rules, and extended loss carry-forward to seven years.

How long does the Cyprus non-dom regime last?

Up to 17 years of 0% tax on dividends and interest, extendable through lump-sum contributions of EUR 250,000.

What changed with the 60-day residency rule?

Qualifying for Cyprus tax residency on the 60-day basis no longer requires proof that you are not tax-resident in another country, removing a practical obstacle to the claim.

Is Cyprus still worth it at 15%?

For IP, holding and non-dom use cases, yes — the surviving features do more for the effective rate than the 2.5-point rise costs. For a plain trading company, a flat-10% jurisdiction like Bulgaria may now be cheaper.

Conclusion

Cyprus at 15% is not the diminished jurisdiction the headline suggested. The reform lifted the base rate but preserved the machinery that actually drives effective tax — IP Box, participation exemption, notional interest deduction — and it made the non-dom and 60-day residency routes easier, not harder. The founders who should reconsider are the ones running plain trading companies with no IP, holding or residency angle; everyone using Cyprus for its real strengths still holds a package no flat-rate competitor matches. Judge it on the full picture, and 15% looks like a footnote, not a verdict.

Wondering whether Cyprus still fits your structure after the reform? Send us what your company does — trading, IP, holding — and whether you want to be personally resident, on Telegram or WhatsApp, and we will model your real effective rate rather than the headline one.