Cyprus Tax Reform 2026: Key Changes for Investors

## Introduction
As of January 1, 2026, Cyprus implemented a comprehensive tax reform aimed at compliance with global OECD standards and EU directives. The changes affected both corporate and personal taxation while maintaining the attractiveness of the island jurisdiction.
## Increase in Corporate Tax Rate
The main change of the reform is the increase in the corporate tax rate from 12.5% to 15%. This brought Cyprus in line with the global minimum tax (OECD Pillar Two), which applies to large international groups with turnover exceeding €750 million.
## Compensatory Measures for Business
To maintain the attractiveness of the tax system, the government plans to:
- Reduce the special defense contribution (SDC) on dividends from 17% to 5%
- Abolish the 3% SDC on rental income
- Maintain existing tax benefits for intellectual property
## Changes for Individuals
For citizens and residents, the following is provided:
- Increase in tax-free minimum
- Adjustment of tax rates: the maximum rate of 35% will apply to incomes over €80,000 (instead of the current €60,000)
- Introduction of "green" tax measures
## Extension of Loss Carry-Forward Period
An important improvement for business is the extension of the loss carry-forward period from 5 to 7 years. This gives companies more flexibility in tax planning, especially during periods of economic uncertainty.
## Practical Conclusions
Despite the increase in the main tax rate, Cyprus maintains competitiveness by reducing other levies and simplifying the tax system. Investors are advised to review their holding structures in light of the upcoming changes.