Cyprus Tax Regime
Cyprus Tax Regime — 2026 Corporate Tax Guide
Cyprus Corporate Tax Rate 2026: What You Need to Know
Corporation Tax
All companies tax resident in Cyprus are taxed at 15% from 1st of January 2026 on their income accrued or derived from all sources both in Cyprus and abroad. From 2026, a company is tax resident in Cyprus if it is incorporated in Cyprus or managed and controlled from Cyprus.
The following types of income are exempt for taxation purposes:
Profits from trading in securities
Dividend income
Interest not arising from the ordinary activities or closely related to the ordinary activities of the company
Losses Carried Forward
Tax losses of one year which cannot be set off against other income may be carried forward and set off against future profits up to 7 years. Alternatively, the current year losses of a company can be set off against the profits of another company provided that the companies are tax resident in Cyprus and are part of a group.
A group is defined as:
Profits
One company holding at least 75% of the shares of another company
At least 75% of the voting shares of both companies are held by another company
Reorganisations
Assets and liabilities may be transferred without tax consequences within a reorganisation structure and tax losses can then be carried forward by the receiving company. Reorganisations include mergers; demergers; transfer of assets and partial divisions.
Special Defence Contribution
Special contribution for defence is in some cases imposed on income earned by Cyprus tax residents. Non-tax residents are exempt from special defence contribution.
More specifically:
Dividend income received from Cyprus resident companies is not subject to special defence contribution
Dividend income received from abroad is exempt from special defence contribution
The exemption will not apply if 50% of the activities of the company paying the dividend result directly or indirectly from investment income and the foreign tax are significantly lower clarified by the tax authorities to mean below 6.25% than the tax burden in Cyprus. Where the exemption does not apply, the dividend income will be subject to special defence contribution at 5% from 1st of January 2026.
Interest income arising from the ordinary activities of the Cyprus resident company or closely related to the ordinary activities will be exempt from special defence contribution
Other interest is subject to 30% special defence contribution
Deemed Dividend Distribution
From 1st of January 2026, the deemed dividend distribution (DDD) provisions have been abolished for profits earned from 2026 onwards. Actual dividend distributions to Cyprus tax resident and domiciled shareholders are subject to Special Defence Contribution at 5%.
The DDD rule no longer applies to profits generated from 1st January 2026 onwards
Actual dividends distributed to Cyprus tax resident and domiciled shareholders are subject to 5% Special Defence Contribution (reduced from 17%)
Dividends paid to non-Cyprus tax resident shareholders remain exempt from Special Defence Contribution
*In case the Cyprus Company is ultimately wholly owned by non-resident individuals, defence contribution provisions will not apply.
Capital Gains Tax
Gains from the disposal of immovable property situated in Cyprus, including gains from the disposal of shares in companies where at least 20% of the share value derives from Cyprus immovable property, will incur capital gains tax at the rate of 20%.
Gains from the disposal of shares listed on a recognised stock exchange remain exempt from capital gains tax.
Stamp Duty
Stamp duty on contracts and legal documents was fully abolished from 1st of January 2026.
International Trust
Cyprus International Trusts are not subject to tax in Cyprus.
This provision means:
All income of a Cyprus International Trust, whether trading or otherwise, is not taxable
Dividend, interest and other income received by a Cyprus International Trust from a Cyprus company is not taxable nor subject to withholding tax
Gains on the disposal of assets held by a Cyprus International Trust are not subject to capital gains tax
Shipping Companies
Where a Cyprus shipping company owns ships under the Cyprus or a foreign flag and operates in international waters, no income tax will be payable on profits earned or dividends paid.
Double Taxation Treaties
Cyprus has a network of 45 Double Taxation Treaties with countries across the globe. In the case where tax is paid in the treaty partner’s country, this is allowed as a credit against the tax payable in Cyprus for the same income.
Value Added Tax
Value Added Tax (VAT) is imposed on the provision of goods and services in Cyprus, on the acquisition of goods from the European Union and on the importation of goods into Cyprus. The standard rate of VAT is 19% from 31/01/2014.