Overview of the 2026 Tax Reform
Cyprus enacted its most comprehensive tax reform in two decades, effective January 1, 2026. The legislation touches virtually every aspect of the tax system — from corporate rates and property transaction costs to individual allowances and cryptocurrency taxation. For property investors and relocating professionals, these changes create both opportunities and new compliance requirements.
Stamp Duty Abolished
Perhaps the most impactful change for property buyers: stamp duty has been completely abolished from January 2026. Previously, buyers paid 0.15% on the first €170,860 and 0.20% on amounts above that threshold. On a €500,000 property, this saves approximately €916 in transaction costs.
This change reduces the total cost of property acquisition and makes Cyprus more competitive with other Mediterranean markets. Combined with the existing VAT reduction (5% instead of 19% for first-time primary residences), the effective tax burden on property purchases is now among the lowest in the EU.
Corporate Tax: 12.5% to 15%
The headline corporate tax rate increases from 12.5% to 15%, aligning Cyprus with the OECD Pillar Two global minimum tax. While this represents a 20% increase in the rate itself, Cyprus remains competitive within the EU — lower than Ireland (15%), Malta (effective 5% with refund system), and significantly below the EU average of 21.3%.
For property holding companies and investment structures, this means slightly higher tax on rental income and capital gains realized through corporate vehicles. However, the extended loss carry-forward period (now 7 years, up from 5) partially offsets this for companies with development or renovation costs.
Dividend and Investment Income Changes
The reform introduces significant changes to how investment income is taxed:
- Dividend withholding tax reduced from 17% to 5% — a major benefit for shareholders
- Constructive dividends (deemed distributions): 10% withholding tax introduced
- Defence tax on passive interest income: abolished entirely
- Rental income: no longer subject to Special Defence Contribution
- Capital gains indirect disposal threshold: reduced from 50% to 20% ownership
Cryptocurrency and Stock Options
Cyprus introduces clear, favorable rules for digital assets and equity compensation:
Cryptocurrency profits are now taxed at a flat 8% rate — one of the lowest in Europe. This applies to both trading gains and mining income for individuals. The clarity alone is significant, as many EU countries still lack specific crypto tax frameworks.
Stock options and equity awards from employment are taxed at 8%, capped at €1 million over a 10-year period. This makes Cyprus highly attractive for tech company employees and startup founders with equity compensation packages.
Individual Tax Changes
The tax-free threshold for individuals has been increased, and new family-based allowances have been introduced. Tax return filing deadlines are shortened to 13 months after the end of the tax year (previously 15 months), requiring better record-keeping and earlier engagement with tax advisors.
For relocating professionals, the existing 50% tax exemption for foreign workers earning above €55,000 remains in place and can be combined with the new allowances, making Cyprus one of the most tax-efficient jurisdictions for high-earning expatriates.
Impact on Property Investors
The net effect of the reform is broadly positive for property investors: abolished stamp duty reduces acquisition costs, removed Defence Tax on rental income improves net yields, and the extended loss carry-forward period benefits those with renovation or development expenses. The corporate tax increase is modest and offset by the dividend withholding reduction.
Property investors should review their holding structures with a qualified tax advisor to ensure they benefit from the new provisions. The reduced indirect disposal threshold (50% to 20%) means that selling shares in a property-holding company may now trigger capital gains tax where it previously would not.