Last update: 30 March 2026 – Status: Official Bill Adopted
The die is cast: the long-awaited Cyprus Tax Reform 2026 is a reality.
Although corporate tax rises slightly from 12.5% to 15%, this new tax reform is a huge victory for entrepreneurs and expats. The mandatory dividend distribution (Deemed Dividend Distribution) has been completely abolished, the regular dividend tax plummets from 17% to 5%, and most importantly: the 0% dividend tax linked to non-dom status remains intact.
Are you looking for the exact Cyprus Tax Reform details without the unreadable jargon of large accounting firms? Here is the practical impact on your assets and business.
The tax reform rules took effect on January 1, 2026.
Cyprus Tax Reform at a Glance (2025 vs 2026)
Short on time? Here are the hard figures confirmed on December 22, 2025:
| Subject | Old Situation (until 2025) | New Law (From 2026) | Impact |
| Dividend Withholding Tax (SDC) | 17% | 5% | Huge savings for locals |
| Compulsory Benefit (DDD) | Mandatory every 2 years (70%) | COMPLETELY ABOLISHED | Freedom Cashflow |
| Corporate tax | 12,5% | 15% | Slight Rise |
| Tax-free Amount (Private) | €19.500 | €22.000 | More Net Salary |
| Crypto Profits | 0% (Gray area) | 8% (Flat tax) or 0% for “Hodlers” | Security & Bankable |
| Non-Dom Status | 0% tax | 0% tax | Remains Unchanged |
1. Dividend tax: from 17% to 5% (the game-changer)
For local Cypriots (domiciled residents), the tax on dividend distributions was always a hefty 17% via the Special Defence Contribution (SDC). With the new tax reform, this rate has been drastically reduced to just 5%.
Calculation example: do you pay yourself €100,000 in profit as a dividend as a 'domiciled' resident?
- Old situation: you paid €17,000 in tax.
- New situation: you pay only €5,000 in tax.
- Your savings: €12,000 straight into your pocket.
2. Abolition of the Deemed Dividend Distribution (DDD)
This is fantastic news for holding companies and investors. Previously, a Cypriot limited liability company (LTD, Ltd.) was required to distribute 70% of its profits as dividends within two years (on which tax was subsequently levied). This complex and frustrating DDD rule has been completely abolished as of 2026. Companies can now freely reinvest their profits without forced distributions.
From 2026: you decide when to pay out dividends. Do you want to leave the profits in the holding company for five years to reinvest in stocks, real estate, or crypto? You are allowed to do so, without a tax penalty.
3. Corporate tax rises to 15%
The most discussed measure of the Cyprus Tax Reform is the increase in corporate tax from 12.5% to 15%.
The impact: this has been done to align with the global 'Pillar Two' minimum tax. Even with this increase to 15%, Cyprus remains one of the most advantageous and transparent business destinations within the European Union, well below the rates of Belgium (25%) or the Netherlands (25.8%).
4. Personal income tax: tax-free up to €22,000
To protect purchasing power, the tax-free allowance has been increased.
- The first €22,000 you earn (salary) is taxed at 0%.
- This used to be €19.500.
This makes it even more attractive to pay yourself a modest salary and let the rest go through the (now cheaper) dividend.
5. Crypto tax: clarity at 8%
There was long-standing uncertainty regarding crypto in Cyprus. The new law finally provides clarity and makes a crucial distinction between active trading and passive ownership.
- Are you an active day trader? Do you earn your living by buying and selling crypto daily? Then a new flat tax of 8% applies to your profits. This is still extremely competitive compared to other EU countries.
- Are you a long-term investor (hodler)? Then there is fantastic news. Profits from holding crypto for the long term (asset growth) are considered capital gains. Tax: 0%. Do you subsequently distribute the profit to yourself via your holding company? As a non-dom, you also pay 0% dividend tax on that.
In short: have you built up a large crypto portfolio and do you want to keep more net income? Cyprus remains very fiscally attractive for long-term crypto investors, certainly as long as your activities are not classified as active trading.
Cyprus Tax Reform: what about non-dom status?
Many customers ask us directly: “Does that 5% also apply to me as a non-domiciled person?” The answer is: no, for you it is even better. The reduction to 5% applies to the Special Defence Contribution (SDC). As a holder of non-domiciled status, you remain legally exempt from SDC. That does not change.
- Are you non-dom? Then you still pay 0% tax on your dividends (SDC).*
- Have you lived there for longer than 17 years? Then you are considered 'domiciled'. Previously, your tax burden would shoot up from 0% to 17%. From 2026, you will go from 0% to just 5%. For those who wish to retain the SDC exemption after 17 years, there is a new option: pay a flat rate of €50,000 per year (€250,000 per five-year period) and retain your exemption for a maximum of two periods, so a total of ten extra years.
The conclusion: you retain your 0% privilege for the first 17 years. But the new law now also makes Cyprus attractive as a “forever home,” because after those 17 years, you are no longer penalized with a much higher rate.
Please note: as always, the small contribution to the healthcare system (GESY) of 2.65% applies to tax residents, regardless of non-dom status.
Why this Tax Reform makes Cyprus even more attractive
Large accounting firms focus on the increase in corporate tax, but in practice, your net return often actually increases due to the flexibility offered by the abolition of the DDD scheme.
You now have full control over when and how you cash out or reinvest your profits.
In addition, other enormous benefits remain unaffected or improved:
- 50% income tax exemption on earned income for new tax residents: the threshold has been lowered from €100,000 to €55,000, allowing more professionals to benefit.
- 0% capital gains tax on trading in shares
- Much more clarity regarding crypto
- 0% inheritance tax
Frequently asked questions about the Cyprus Tax Reform:
What does the Cypriot tax reform of 2026 entail?
The Cyprus Tax Reform 2026 is a comprehensive package of tax changes that entered into force on 1 January 2026. The key elements are the increase in corporate tax to 15%, the reduction of SDC dividend tax from 17% to 5% (for domiciled residents), and the complete abolition of the complex Deemed Dividend Distribution (DDD) rules.
What are the consequences of the new tax reform in Cyprus for non-residents?
The new tax reform has no negative (personal) impact whatsoever on expats with non-dom status. Foreign entrepreneurs and investors moving to Cyprus continue to benefit from a statutory exemption of 0% on all their dividend and interest income for a period of 17 years.
How much is the new corporate tax in Cyprus?
As of 2026, the general corporate income tax rate in Cyprus has been increased from 12.5% to 15%. This has been done to comply with international OECD guidelines. Nevertheless, this 15% rate remains one of the lowest and most business-friendly tax rates within the European Union.
Has the 70% dividend requirement (DDD) been abolished in Cyprus?
Yes, one of the biggest benefits of the Cyprus Tax Reform is the complete abolition of the Deemed Dividend Distribution (DDD) provisions. Companies are no longer penalized fiscally if they retain their profits within the company to reinvest instead of distributing them.
