This Cyprus tax guide covers the rules in force from 1 January 2026. Cyprus is an EU member with a 15% corporate tax rate, a progressive personal income tax that exempts the first €22,000 (≈ $25,300), and a non-dom regime giving up to 17 years of zero tax on dividends and interest. There is no inheritance tax, no wealth tax, and capital gains tax applies only to Cyprus real estate. A 2026 reform raised corporate tax and recut several rates.
Introduction
Cyprus is the third-largest island in the Mediterranean, lying south of Turkey and west of Syria and Lebanon, at the crossroads of Europe, the Middle East and North Africa. It joined the European Union in 2004 and adopted the euro in 2008, and the Greek-Cypriot-administered south operates as a stable EU parliamentary republic. The island is politically divided: the northern third has been under Turkish control since 1974, a frozen dispute that still shapes its geopolitics. The climate is classic Mediterranean — hot dry summers, mild winters, and one of the sunniest records in Europe — paired with English widely spoken, a common-law-based legal system inherited from British rule, and a relatively low cost of living for the EU.
For internationally-mobile investors, entrepreneurs and high earners, this Cyprus tax guide matters because the island combines EU membership with one of the lighter tax burdens in the bloc. The headline draws are a 15% corporate rate, the non-domicile regime that exempts foreign and local dividends and interest from tax for up to 17 years, the absence of inheritance and wealth taxes, and a residency rule that lets people qualify as tax resident in as little as 60 days a year. A comprehensive tax reform — voted by Parliament on 22 December 2025 and effective 1 January 2026 — reshaped parts of the system, raising corporate tax from 12.5% to 15% in line with the OECD global minimum, lifting personal tax thresholds, and cutting the dividend tax.
Direct Taxes
Cyprus taxes resident individuals on worldwide income and non-residents only on certain Cyprus-source income. The system is progressive: higher rates apply only to the slice of income within each band, not to the whole amount. Companies that are tax resident in Cyprus (managed and controlled there) are taxed on worldwide profits at a flat rate.
A separate levy, the Special Defence Contribution (SDC), applies to dividends, most interest and rental income — but only for individuals who are both Cyprus tax resident and Cyprus domiciled. This domicile distinction is the mechanism behind the non-dom regime and is the single most important concept in this guide for investors.
Personal income tax (2026 bands)
| Chargeable income (EUR) | Rate |
|---|---|
| 0 – 22,000 (≈ $0–25,300) | 0% |
| 22,001 – 32,000 (≈ $25,300–36,800) | 20% |
| 32,001 – 42,000 (≈ $36,800–48,300) | 25% |
| 42,001 – 72,000 (≈ $48,300–82,800) | 30% |
| Over 72,000 (≈ over $82,800) | 35% |
The €22,000 (≈ $25,300) tax-free threshold and the bands above took effect on 1 January 2026 under the reform (they replaced the previous structure, which exempted the first €19,500 (≈ $22,400) and reached 35% above €60,000 (≈ $69,000)). The reform also introduced targeted, documentation-driven reliefs for children, primary-residence financing, and energy/EV upgrades, subject to income conditions.
Corporate income tax
| Item | Rate |
|---|---|
| Standard corporate income tax (from 1 Jan 2026) | 15% |
| Standard corporate income tax (to 31 Dec 2025) | 12.5% |
| IP Box — effective rate on qualifying IP profit | ~2.5%–3% (80% of qualifying profit exempt) |
The rise to 15% aligns Cyprus with the OECD/EU global minimum tax (Pillar Two), which applies to groups with consolidated turnover of at least €750 million (≈ $860 million); smaller companies simply pay the 15% headline rate. Cyprus retains a participation exemption for qualifying dividends, a notional interest deduction on new equity, no withholding tax on most outbound dividends, interest and royalties to non-residents, and an extended tax-loss carry-forward (lengthened from five years under the reform). The reform also introduced an 8% flat tax on gains from cryptoasset transactions and a 5% withholding tax on dividends paid to associated companies in low-tax or blacklisted jurisdictions.
Social security and health contributions
| Contribution | Employee | Employer | Self-employed |
|---|---|---|---|
| Social insurance | 8.8% | 8.8% | 16.6% |
| General Health System (GHS/GeSY) | 2.65% | 2.90% | 4.00% |
Social insurance is capped on annual insurable earnings of €66,612 (≈ $76,600) (2025 cap). GHS contributions are capped at €180,000 (≈ $207,000) of annual income and also apply at 2.65% to pensioners and to rental, interest and dividend income. The social insurance rate is legislated to rise in five-year steps to roughly 10.3%–10.7% by 2039.
Indirect Taxes
Cyprus levies VAT in line with the EU VAT Directive, plus excise duties on the usual categories. VAT is the main indirect tax and applies to goods and services supplied in Cyprus, intra-EU acquisitions and imports.
Value-added tax (VAT)
| Rate | Applies to (examples) |
|---|---|
| 19% (standard) | Most goods and services |
| 9% (reduced) | Hospitality, restaurants, certain accommodation and transport |
| 5% (reduced) | Foodstuffs, pharmaceuticals, books, and the first 130 m² of a qualifying primary residence |
| 3% (reduced) | Limited categories (e.g. certain books, newspapers, supplies for disabled persons) |
| 0% (zero) | Exports, intra-EU supplies, international transport |
Excise and other indirect taxes
| Tax | Notes |
|---|---|
| Excise duties | On energy products/fuel, alcohol and tobacco, harmonised with EU rules |
| Immovable property transfer fees | 3% / 5% / 8% by value band; nil if VAT was charged on purchase, otherwise reduced by 50% |
| Property transfer levy | 0.4% on disposals of immovable property (and certain share disposals), paid by the seller |
| Stamp duty | On documents/contracts relating to Cyprus assets; modest, capped amounts |
Other Taxes Worth Knowing
| Tax | Cyprus treatment |
|---|---|
| Capital gains tax | 20% — only on gains from Cyprus-situated immovable property (or shares deriving value from it). Gains on shares, securities and foreign property are not subject to CGT. |
| Dividends (resident individual) | Exempt from income tax. SDC applies only if Cyprus-domiciled — cut to 5% under the reform (was 17%). Non-doms: 0%. |
| Interest (resident individual) | Exempt from income tax. SDC of 17% if Cyprus-domiciled (3% on qualifying government/listed bonds). Non-doms: 0%. |
| Rental income | Income tax at normal bands; SDC of 2.25% effective applied for domiciled individuals (being phased out of SDC under the reform for companies; confirm individual treatment). |
| Wealth / net worth tax | None |
| Inheritance / estate tax | None (abolished in 2000) |
| Gift tax | None on gifts within the family; transfer fees nil/0.1% on family property transfers |
| Immovable property tax (annual) | Abolished as of 1 January 2017 |
The CGT base is narrow by design: a Cyprus tax resident investor selling a foreign portfolio, foreign property or shares generally pays no Cyprus CGT. Lifetime CGT exemptions also apply to Cyprus property — up to €85,430 (≈ $98,200) on a principal residence, €25,629 (≈ $29,500) on agricultural land sold by a farmer, and €17,086 (≈ $19,650) on any other disposal (overall lifetime cap €85,430 (≈ $98,200)).
Disadvantages & Risks
Cyprus is attractive, but the risks are real and specific. The island is politically divided: the Turkish-occupied north is a live, unresolved dispute, and tensions with Turkey over maritime boundaries and offshore gas periodically flare. Geographically, Cyprus sits beside a volatile region — Syria, Lebanon and the wider Eastern Mediterranean — which adds geopolitical and security risk that a North-Western European jurisdiction does not carry.
The banking sector carries reputational baggage. The 2013 financial crisis brought a bail-in that imposed losses (“haircuts”) on large depositors, and Cyprus has long battled a reputation as a conduit for Russian capital. Since 2022, sanctions enforcement and de-risking by international correspondent banks have made opening and maintaining accounts more demanding, and Cypriot banks apply heavy compliance scrutiny. The citizenship-by-investment (“golden passport”) scheme was scrapped in 2020 after abuse scandals, drawing EU criticism — though the residency-by-investment route remains.
It is a small, services-dependent economy exposed to tourism, shipping and financial services, with the concentration risk that implies. On the tax side, Cyprus is an EU member and is not on any EU or OECD blacklist or grey list, but it has faced Moneyval/FATF scrutiny on anti-money-laundering, and the global minimum tax has already eroded part of its rate advantage (hence the 2026 rise to 15%). Substance requirements have tightened: a brass-plate company with no real presence is increasingly likely to be challenged.
Strategy & Ideal Profile
The structures that work best in Cyprus pair the non-dom regime with a Cyprus holding or operating company. A non-dom individual who becomes Cyprus tax resident can receive dividends and interest — local or foreign — free of SDC for up to 17 years, while drawing a modest salary that benefits from the €22,000 (≈ $25,300) tax-free band and (for qualifying new arrivals) the 50% income-tax exemption on employment income above €55,000 (≈ $63,300). Profits can be retained or distributed through a Cyprus company taxed at 15%, with the participation exemption sheltering qualifying inbound dividends and no withholding tax on most outbound flows. IP-rich businesses can layer the IP Box on top for an effective rate near 2.5%–3% on qualifying profits.
This suits company owners and entrepreneurs who can route international income through a substantive Cyprus structure; investors and traders who realise gains on shares, securities and crypto (no CGT on securities; an 8% flat rate now applies to crypto gains, still low); dividend- and interest-earners who want EU residence with near-zero tax on passive income; and retirees, who can elect a flat 5% tax on foreign pension income above a small threshold. The 60-day residency rule makes Cyprus practical for the genuinely mobile: you can be tax resident by spending 60 days on the island, not being tax resident elsewhere, not spending 183+ days in any other single country, and maintaining a Cyprus tie (business, employment or directorship plus a permanent home).
It does not suit those wanting a zero-tax jurisdiction (Cyprus still taxes salaries, corporate profit and rental income), people unwilling to establish real substance and physical presence, or anyone uncomfortable with the banking-compliance burden and the region’s geopolitical risk. The non-dom benefit is also time-limited — after 17 years of residence in any 20, you become deemed domiciled and SDC applies.
FAQ
Is Cyprus a tax haven?
No. Cyprus is a low-tax EU member with full VAT, social security and a 15% corporate tax, not a zero-tax haven. Its appeal is the non-dom regime, the absence of inheritance and wealth taxes, and CGT that applies only to local property.
What is the corporate tax rate in Cyprus in 2026?
15%, up from 12.5% on 1 January 2026, aligning with the OECD global minimum tax. It remains one of the lower headline rates in the EU.
How does the Cyprus non-dom regime work?
A Cyprus tax resident who is not Cyprus-domiciled is exempt from the Special Defence Contribution on dividends and interest — effectively 0% tax on that income — for up to 17 years. After being tax resident for 17 of the last 20 years, you become deemed domiciled and SDC applies.
What is the 60-day tax residency rule?
You can be Cyprus tax resident by spending at least 60 days there in a year, provided you are not tax resident elsewhere, do not spend more than 183 days in any other single country, and keep a Cyprus tie such as a business, employment or directorship plus a permanent home.
Does Cyprus tax capital gains?
Only on gains from Cyprus-situated immovable property (and shares deriving their value from it), at 20%. Gains on shares, securities and foreign assets are generally not subject to Cyprus CGT.
Is there inheritance or wealth tax in Cyprus?
No. Inheritance tax was abolished in 2000 and there is no net wealth tax. Annual immovable property tax was abolished in 2017.
How are dividends taxed for a non-dom investor?
Dividends are exempt from personal income tax for everyone, and a non-dom pays no SDC on them either — so 0% during the non-dom period. A Cyprus-domiciled individual now pays SDC at 5% (reduced from 17% under the 2026 reform).
Sources
All figures should be checked against the primary government sources below.
- Tax Department, Ministry of Finance of the Republic of Cyprus — home page — https://www.mof.gov.cy/mof/tax/taxdep.nsf/index_en/index_en
- Tax Department — Income Tax section — https://www.mof.gov.cy/mof/tax/taxdep.nsf/ced01_en/ced01_en
- Tax Department — Information for Businesses (corporate income tax) — https://www.mof.gov.cy/mof/TAX/taxdep.nsf/0/05d1dd1ff245f610c2258657002c8d01?OpenDocument
- Tax Department — Information for Individuals — https://www.mof.gov.cy/mof/TAX/taxdep.nsf/All/182C755EBA4E406EC225853E002EDAE8?OpenDocument
- Social Insurance Services, Ministry of Labour and Social Insurance — Basic Insurable Earnings and contribution rates — https://www.mlsi.gov.cy/mlsi/sid/sidv2.nsf/page94_en/page94_en?OpenDocument
- Social Insurance Services — self-employed contribution categories — https://www.mlsi.gov.cy/mlsi/sid/sidv2.nsf/page95_en/page95_en?OpenDocument
- gov.cy — official portal of the Republic of Cyprus (tax and social insurance services) — https://www.gov.cy/en/
- 2026 tax reform: laws voted by the House of Representatives on 22 December 2025 and published in the Official Gazette of the Republic of Cyprus on 31 December 2025 — House of Representatives: https://www.parliament.cy/ | Government Gazette: https://www.mof.gov.cy/
Last verified: 7 June 2026.
This is general information, not personal tax or legal advice. Tax outcomes depend on your specific facts; consult a qualified Cyprus tax adviser before acting.
Related guides: Andorra · Costa Rica · Georgia · Gibraltar · Jersey · Mauritius · Monaco · Montenegro · New Zealand · Panama · Paraguay · Singapore · UAE · Uruguay