Cyprus Announces Major Tax Reform for 2026
The Cyprus government has unveiled a landmark tax reform package, the most comprehensive in decades, aiming to ease the burden on households and keep Cyprus competitive for business. The new rules are expected to take effect on 1 January 2026, following consultation and parliamentary approval later this year.
For individuals, the tax-free threshold will rise to €20,500, income brackets will be adjusted to benefit middle earners, and generous deductions will apply for families, housing costs, and green investments. Single parents will enjoy double allowances, further reducing their tax exposure.
For businesses, the corporate tax rate will increase slightly to 15%, while outdated rules on deemed dividend distributions will be abolished. Dividend withholding tax for Cyprus residents will fall from 17% to 5%, and incentives for investment in innovation, digitalisation, and sustainability will be expanded.
This reform promises to deliver a fairer system for households while ensuring Cyprus remains an attractive hub for international companies.
