The December 2025 reform reshaped Cyprus's tax system in ways that matter directly to the people who moved there — or are considering it. Here is what changed, what stayed the same, and why the headline numbers only tell part of the story.
Corporate Tax: From 12.5% to 15%
The most-discussed change is the corporate tax rate increase from 12.5% to 15%. Cyprus aligned with the OECD Pillar Two minimum — a move that affects large multinationals more than the typical expat-founder running a Cyprus Ltd.
For a founder paying themselves via dividends through a Cyprus company, the effective tax path still works out to roughly ~17% total (15% corporate + 2.65% GHS on dividends under Cyprus Non-Dom status). That compares favourably with Ireland's 12.5% corporate + 25% on dividends, or the UK's 25% corporate + 33.75% dividend tax.
The reform did not break the structure. It adjusted one variable.
New Income Tax Brackets
Personal income tax bands changed alongside the corporate rate. The key threshold moved up from EUR 19,500 to EUR 22,000 — meaning the first EUR 22,000 of salary income is still taxed at 0%.
New bands from January 2026:
| Income (EUR) | Rate |
|---|---|
| 0 - 22,000 | 0% |
| 22,001 - 32,000 | 20% |
| 32,001 - 42,000 | 25% |
| 42,001 - 72,000 | 30% |
| Over 72,000 | 35% |
In practice, most founders who use the dividend-first structure pay themselves a modest salary (often below EUR 22,000) and distribute profits as dividends. The income tax brackets become largely irrelevant — which is why the Cyprus Non-Dom status is still the cornerstone of the planning.
SDC on Dividends: From 17% to 5%
This is the change that gets the least attention but affects domiciled shareholders most. The Special Defence Contribution (SDC) on dividends dropped from 17% to 5% for Cyprus-domiciled individuals. Non-Dom holders never paid SDC — that was already 0% plus 2.65% GHS. But this makes Cyprus more attractive even for those who are or become domiciled.
Crypto: 8% Flat Rate
Cyrus introduced a dedicated 8% flat rate for crypto gains in 2026. Previously, crypto was covered under the zero-CGT framework for most assets, with some ambiguity. The new rate is explicit: 8% on gains from crypto disposals for tax residents.
For context, the UK charges up to 24% CGT on crypto. Germany taxes crypto held under a year at income tax rates (up to 45%). The 8% rate in Cyprus, while new, remains one of the lowest in the EU.
Stamp Duty: Abolished
Stamp duty on contracts was eliminated entirely in 2026. For founders signing shareholder agreements, loan agreements, or service contracts under Cyprus law, this removes a cost that was previously calculated as a percentage of contract value (up to EUR 20,000 cap per document). It is a real saving on transaction costs.
What Did Not Change
The parts that drive most relocation decisions remained intact:
- Non-Dom dividends: still 0% income tax + 2.65% GHS (capped at EUR 4,770/year). No SDC.
- Capital gains on shares and securities: still 0%. Exits from equity remain tax-free for Cyprus tax residents.
- The 60-day tax residency rule: still available. Spend 60+ days in Cyprus (without being tax resident elsewhere), maintain local ties, and you qualify for full Cyprus tax residency.
- IP Box: still 2.5% effective rate on qualifying intellectual property income.
- GHS cap: EUR 180,000 contribution base, so maximum GHS contribution is EUR 4,770/year regardless of income.
The Registration Step Most People Skip
None of these rates apply until you are actually on the Cypriot system. The first step for EU nationals is obtaining a Yellow Slip (MEU1 registration) — the document that proves you have exercised your EU free movement rights and established residence in Cyprus. Without it, you cannot open a bank account, register with the tax office, or formally apply for Non-Dom status.
The Yellow Slip is the administrative entry point. Many founders delay it or get the paperwork wrong the first time. The guide linked above covers what documents you need and what to expect from the immigration office.
The Honest Comparison
At 15% corporate + 2.65% on dividends, a Cyprus-based founder with EUR 200,000 in distributable profits pays approximately EUR 32,300 in total (corporate + GHS). The same EUR 200,000 in the UK results in EUR 50,000+ after corporation tax and dividend tax.
The 2026 reform raised the headline rate. The effective outcome for founders using the standard structure moved from approximately 14.7% to 17%. That is still the lowest in the EU for this income type.
This article is for informational purposes only and does not constitute tax or legal advice. Tax situations vary — consult a qualified Cyprus tax advisor before making any decisions.
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