Cyprus Tax system

As of 1 January 2026, all companies which are tax resident in Cyprus are taxed at 15% on income accrued or derived from all sources both in Cyprus and abroad. A company is considered to be tax resident in Cyprus if it is managed and controlled from Cyprus or incorporated in Cyprus, unless otherwise provided by a double tax treaty.

Exempt Income

The following types of income are exempt from taxation:

• Profits from trading in securities
• Dividends
• Interest which does not arise from the ordinary activities of the company

Losses Carried Forward

Tax losses in one year which cannot be set-off can be carried forward and set-off against future profits for up to 7 years. Alternatively, current year losses can be set-off against profits made by another company if both companies are tax resident in Cyprus and are both part of a Group. Companies must first utilise their own losses before group relief is applied.

A Group is defined as:

• One company holding not less than 75% of shares in another company.
• At least 75% of voting shares of both companies are held by another company.

Reorganisations, Mergers, Transfer of Assets, Partial Divisions

Assets and liabilities can be transferred without any tax implications with a Reorganization structure, and tax losses may then be carried forward by the receiving company. Reorganizations include mergers, demergers, transfer of assets, and partial divisions.

Special Defence Contribution

A special defence contribution is in some instances imposed on income earned by tax resident individuals. Non-tax residents are exempt from this special defence contribution.

• Dividends received from Cyprus resident companies are generally not subject to special defence contribution at the company level.
• Dividends received from abroad are also generally exempt. This tax exemption will not apply if 50% of the activities of the company which pays the dividend arise directly or indirectly from investment income and the foreign tax imposed is significantly lower (below 7.5%) than the tax in Cyprus. In these cases, dividends may be subject to special defence contribution.
• Interest arising from companies is subject to income tax under the normal corporate tax rules.

Deemed Dividend Distribution

The deemed dividend distribution rules have been abolished for profits generated from 1 January 2026 onwards.

Capital Gains Tax

Profit from the disposal of immovable property situated in Cyprus, including profit from the disposal of shares in companies which derive directly or indirectly at least 20% of their value from immovable property in Cyprus, will be subject to 20% Capital Gains Tax.

Stamp Duty Rate

Stamp duty has been abolished for contracts executed on or after 1 January 2026. The previous rates applied to contracts executed prior to that date.

International Trusts

Cyprus International Trusts are not taxed in Cyprus under certain conditions. This means that:

• All the income of a Cyprus International Trust, whether trading or otherwise, may not be taxed in Cyprus depending on the tax residency of the beneficiaries and the source of income.
• Dividend, interest, and other income received by a Cyprus International Trust from a Cyprus company may not be subject to tax or withholding tax, depending on the structure.
• Profits from the disposal of assets held by a Cyprus International Trust are not subject to Capital Gains Tax, provided the assets do not relate to immovable property situated in Cyprus.

Shipping Companies

No income tax will be payable on profits earned or dividends paid by a Cyprus shipping company that falls under the Cyprus tonnage tax system and operates in international waters.

Double Taxation Treaties in Cyprus

Cyprus has concluded an extensive network of Double Tax Treaties. Essentially, this means that when tax is paid in the treaty partner country, then this sum is offset from the amount of tax payable in Cyprus for the same income.

Value Added Tax

Value Added Tax (VAT) is imposed on the provision of goods and services in Cyprus, on goods from the European Union, and on imported goods into Cyprus. The standard VAT rate in Cyprus is 19%.