In short
- 15% on taxable profit from tax year 2026. Tax year 2025 is the last at 12.5%.
- Dividends received and gains on shares are exempt in most cases. IP Box profit bears about 3%.
- Tax losses carry forward for 7 years. Capital gains tax is 20%, on real estate in Cyprus.
- The owner pays 0% to 35% on a salary and 5% on dividends, or 0% with non-dom status.
In this guide
Cyprus corporate tax rate in 2026: 15% of taxable profit
A company that is tax resident in Cyprus pays corporate income tax at 15% on its income from Cyprus and from abroad. The rate applies from tax year 2026, and tax year 2025 is the last at 12.5%. It is flat, whatever the size of the company or of its profit.
A company that is resident elsewhere pays Cyprus tax on the profit of a permanent establishment in Cyprus and on certain other income from Cyprus.
Two regimes sit beside the standard rate. Gains from the disposal of crypto-assets bear a flat 8% from 2026. Groups with a turnover of €750 million or more follow the rules on a 15% minimum tax, which leave a founder's company untouched.
We compute the tax of your company and file its returns: see Cyprus corporate tax services.
What changed on 1 January 2026: before and after
The tax reform changed more than the rate. Eight rules matter to a company and its owner.
| Rule | Until tax year 2025 | From tax year 2026 |
|---|---|---|
| Corporate tax rate | 12.5% | 15% |
| Tax residence of a company | Managed and controlled in Cyprus, or incorporated in Cyprus and resident nowhere else | Managed and controlled in Cyprus, or incorporated in Cyprus unless a tax treaty places it elsewhere |
| Tax losses carried forward | 5 years | 7 years |
| Interest and rent a company earns | Special Defence Contribution on passive interest and on rent | Corporate tax alone |
| Profit a company keeps | 70% deemed distributed after two years, where the shareholders are resident and domiciled in Cyprus | No deemed distribution for profits of 2026 onwards |
| Gains from crypto-assets | The general rules | A flat 8% |
| Entertainment costs a company deducts | 1% of gross income, up to €17,086 | 1% of gross income, up to €30,000 |
| Stamp duty on documents | Charged | Abolished |
The return has a new date too: 31 January of the second year after the tax year, with the balance of the tax due on the same day. The guide to the Cyprus tax calendar lists every date of 2026 and 2027.
How corporate tax is calculated in Cyprus: from the accounts to the taxable profit
The 15% is charged on the taxable profit. An accountant reaches it from the audited accounts in six steps.
- Start from the profit before tax in the financial statements, prepared under IFRS.
- Add back what the tax law does not deduct: entertainment above 1% of gross income or €30,000, whichever is lower, costs that did not serve the business, foreign exchange losses.
- Take out the income that is exempt: dividends, gains on the sale of shares and other securities, the profit of a permanent establishment abroad, foreign exchange gains.
- Deduct the allowances: depreciation at the rates the tax law sets and the cost of acquired intellectual property over its life, up to 20 years. Spending on research and development is deducted at 120% until tax year 2030.
- Deduct the two reliefs that lower the base most. The IP Box takes off 80% of the qualifying profit from the company's own software and patents. The notional interest deduction applies to equity paid in since 2015, up to 80% of the profit that equity produces.
- Set off the tax losses of the previous 7 years. A company in a group with 75% common ownership can also use the loss another group company made in the same year.
The result is the taxable profit. Tax paid abroad on the same income is credited against the Cyprus tax. Which profit the IP Box covers is in the guide to the Cyprus IP Box.
Every figure of the computation comes from the books, so it is as good as the bookkeeping behind it: see accounting services in Cyprus.
Worked example: the 2026 tax of a software company
A Cyprus company develops and licenses its own software. For 2026 its accounts show a profit before tax of €300,000. The figure includes a dividend of €40,000 from a subsidiary, a gain of €20,000 on the sale of shares in another company and a foreign exchange loss of €10,000. Of the trading profit, €100,000 qualifies for the IP Box. A tax loss of €30,000 comes forward from 2024.
| Step | Amount |
|---|---|
| Profit before tax in the accounts | €300,000 |
| Add: foreign exchange loss, neutral for tax | €10,000 |
| Less: dividend from the subsidiary, exempt | €40,000 |
| Less: gain on the sale of shares, exempt | €20,000 |
| Less: IP Box, 80% of €100,000 | €80,000 |
| Less: tax loss brought forward | €30,000 |
| Taxable profit | €140,000 |
| Corporate tax at 15% | €21,000 |
The tax is €21,000, which is 7% of the profit in the accounts. At the rate of 2025 the same taxable profit would have borne €17,500, so the reform costs this company €3,500 a year.
We do this for you Cyprus corporate tax services from €290 a month with accounting
Tax residence: which companies pay the 15%
From 2026 a company incorporated in Cyprus is tax resident there by default, unless a tax treaty places it in another country. A company formed abroad is resident when it is managed and controlled in Cyprus.
Where the company is run still matters, because a tax treaty can place a company in the other country when it is managed from there. The Tax Department looks at the facts: where the board meets, where the strategic decisions are taken and where the directors live. It also asks where the company is managed day to day, where its books are kept and where it signs its main contracts. No single fact decides. The same facts decide whether the company can rely on the treaties Cyprus has with more than 65 countries.
Gains on a sale: 20% on real estate in Cyprus, none on shares
Capital gains tax is a separate tax of 20%. It applies to the gain from the disposal of immovable property in Cyprus and of shares in a company that owns such property, wherever the seller is tax resident. From 2026 it also reaches shares in a company that holds the property through other companies, where 20% or more of the value of the shares comes from it. Before, the line stood at 50%.
Gains on other shares, bonds and securities bear neither capital gains tax nor corporate tax.
How the gain is calculated
The gain is the sale price less the cost: the purchase price, or the value on 1 January 1980 for property bought earlier, with the costs of building and improvement. The cost is raised by inflation up to the month before the sale, from the Tax Department's table of inflation values. Transfer fees, valuation and legal costs, the estate agent's commission and the interest on the loan for the purchase are then deducted as they stand.
Take a company that bought an office for €300,000 and sells it for €450,000. Prices rose by 10% in between, so the indexed cost is €330,000. With €10,000 of selling costs the gain is €110,000 and the tax €22,000.
An individual has lifetime exemptions that a company does not have. For disposals from 1 January 2026 they are €30,000 of gains in general, €50,000 for a farmer's agricultural land and €150,000 for a main residence. A seller who trades in property pays income tax on the profit. The Tax Department decides who trades by criteria such as how long the property was held and how often the seller makes such sales.
The exemptions, the forms and a share sale in figures are in the guide to Cyprus capital gains tax.
The owner's own tax: salary, dividends, the 50% exemption
The company's tax is the first of two layers. The second falls on what the owner takes out. A salary bears income tax at these bands from tax year 2026:
| Taxable income a year | Rate | Tax at the top of the band |
|---|---|---|
| Up to €22,000 | 0% | €0 |
| €22,001 to €32,000 | 20% | €2,000 |
| €32,001 to €42,000 | 25% | €4,500 |
| €42,001 to €72,000 | 30% | €13,500 |
| Above €72,000 | 35% | €13,500 and 35% of the excess |
A director paid €60,000 a year owes €7,839 of income tax. Social insurance and the health contribution, €6,870 in all, come off the salary first. Of the €53,130 that remains, €4,500 falls on the part up to €42,000 and 30% on the other €11,130.
On dividends from profits of 2026 onwards, a shareholder who is tax resident and domiciled in Cyprus pays 5% Special Defence Contribution and 2.65% to the health system. With Cyprus non-dom status the contribution is 0% for up to 17 years. The guide on how to distribute dividends in Cyprus works through each case.
Who qualifies for the 50% exemption on a salary
The exemption goes to a person who takes a first employment in Cyprus with pay above €55,000 a year, after at least 15 consecutive tax years of not being resident in Cyprus. Half of the salary is then exempt from income tax for 17 years.
Deductions, exemptions and the return of a person: Cyprus income tax.
Paying the tax: two instalments and one return
A company pays its corporate tax during the year, as provisional tax on the profit it expects: half by 31 July and half by 31 December. The software company of the example pays €10,500 on each date when its estimate matches the result. Where an estimate turns out under 75% of the final profit, 10% is added to the tax underpaid.
The return follows by 31 January of the second year after the tax year, with any balance: 31 January 2028 for 2026. We estimate the year from your books, declare the provisional tax, claim the deductions and file the return: filing the corporate tax of a Cyprus company.
