Cyprus taxes residents on worldwide income and non-residents on Cyprus-source income only. Cyprus operates a self-assessment system for corporate tax. Cyprus implemented significant changes effective 1 January 2026 across personal income tax, corporate taxation, and the Special Defence Contribution (SDC) - confirm current-year specifics directly given this recent, substantial reform.
The Cypriot tax year is the calendar year. The individual filing deadline is generally 31 July of the following year.
Cyprus's headline corporate income tax (CIT) rate is 15% (as of 1 January 2026; 12.5% prior).
The headline personal income tax (PIT) rate is 35%.
The standard VAT/GST (or equivalent consumption tax) rate is 19%.
Since 2017, an individual is a Cyprus tax resident under either of two tests. The "183-day rule": presence in Cyprus for more than 183 days in the calendar year, no further conditions required. The "60-day rule" (for internationally mobile individuals): presence in Cyprus at least 60 days, not present in any single other state for more than 183 days, carrying on business/employment in Cyprus or holding a directorship in a Cyprus-resident company during the year, and maintaining an owned or rented permanent residential property in Cyprus. As of a January 2026 reform, the former fifth condition - not being tax resident anywhere else - was removed; dual residency is now permitted and resolved via treaty tie-breaker rules where applicable. Non-resident companies are taxed only on Cyprus permanent-establishment income or specific Cyprus-source income.
A non-Cypriot entity has a Cyprus permanent establishment through a fixed place of business or a dependent agent habitually concluding contracts in Cyprus on the entity's behalf, following the OECD Model Treaty definition as applied under Cypriot domestic law and any applicable tax treaty.
Cyprus's CFC regime (effective since January 1, 2019) applies where a Cyprus CIT payer, alone or with associated enterprises, holds a direct or indirect interest of more than 50% in a low-taxed non-Cyprus company (or a low-taxed exempt foreign permanent establishment). The Cyprus parent must include in taxable profit the CFC's non-distributed income to the extent it arises from non-genuine arrangements put in place for the essential purpose of obtaining a tax advantage.
Cyprus has no fixed debt-to-equity ratio. An ATAD-based interest limitation rule caps deductible exceeding borrowing costs at 30% of taxable EBITDA, with an annual EUR 3 million safe-harbor threshold below which the rule does not restrict deductions at all. Unused interest capacity can be carried forward five years, subject to anti-abuse restrictions on ownership changes.
Cyprus does not use an elective check-the-box classification system; entity classification generally follows the entity's actual legal characteristics. Cyprus has implemented ATAD2-aligned anti-hybrid rules denying deductions for payments producing a hybrid mismatch outcome.
No foreign bank account or foreign financial asset reporting regime exists requiring residents to separately disclose foreign accounts; foreign income is reported through the standard annual tax return.
Cyprus provides a genuine, well-known participation exemption: dividends received from a foreign subsidiary are exempt from both corporate income tax and the Special Defence Contribution (SDC), provided the Cyprus company holds at least 1% of the subsidiary's share capital, and the exemption is denied only in the narrow case where the paying subsidiary is entitled to deduct the dividend as an expense (i.e., it is economically more like disguised interest than a genuine profit distribution). Capital gains on the disposal of qualifying titles (shares, bonds, and most other securities, per Article 8(22) of the Income Tax Law) are separately and fully exempt from corporate tax, with no minimum holding requirement, except for gains attributable to Cyprus-situated real estate.
Cyprus has a real foreign tax credit regime available to both individuals and companies for foreign tax paid on foreign-source income also taxed in Cyprus, capped at the Cypriot tax otherwise due on that income.
Cyprus maintains 67 double tax treaties currently in force (the Ministry of Finance's own list shows 71 treaty entries in total, some not yet in force), one of the most extensive networks in the EU, spanning Germany, Russia, China, India, and most EU member states - notably, Cyprus has no comprehensive treaty with the United States. Notably, a Cyprus-France treaty signed in 2021 (after Cyprus and France had no DTT for years, creating cross-border uncertainty) was finally approved by the French Senate on February 20, 2026, and remained pending final exchange of ratification instruments as of the most recent verification.