The reform raised the corporate rate, softened personal income tax, cut the dividend SDC for locals and left the non-dom framework standing. Passed on 22 December 2025, in force since 1 January 2026. Most content online still describes the old system, which is exactly why this page exists.
Old system vs new, the founder-relevant lines
| Until end of 2025 | From 1 January 2026 | |
|---|---|---|
| Corporate income tax | 12.5% | 15% |
| Personal tax-free band | €19,500 | €22,000, then 20% to €32k, 25% to €42k, 30% to €72k, 35% above |
| SDC on dividends (domiciled residents) | 17% | 5% on profits earned from 2026 |
| SDC on dividends (non-doms) | Exempt | Still exempt, 17-year horizon intact |
| Tax loss carry-forward | 5 years | 7 years |
| Stock options and crypto gains | General rules | New 8% regime under conditions |
| IP box | ~2.5% effective | Retained; ~3% effective (80% exemption against the higher rate) |
| Large termination or ex gratia payments | Favourable treatment | Amounts above €200,000 can be taxed at 20% under conditions |
| Annual company levy | Already abolished in 2024 (worth repeating, because old guides still charge you €350 for it) | |
What it means by founder profile
- Owner-operator non-dom. Your dividends stay SDC-free; the corporate rise costs roughly 2.5 points of profit. On €120k profit the all-in burden moves to about 18% (check your own number). Salary earners also gained a little from the wider bands.
- Cyprus-domiciled founders. The quiet winners. Dividend SDC falling from 17% to 5% outweighs the corporate rise for most profitable owner-managed companies. If you ruled out dividends under the old system, rerun the math.
- IP-heavy companies. The IP box survived with its 80% exemption; the effective rate ticked up to roughly 3% only because the headline rate rose. Still one of the strongest compliant IP regimes in the EU.
- Startups burning cash. Losses now carry forward 7 years instead of 5. For anyone spending two or three years pre-revenue, that is a real improvement in how much of the burn eventually offsets profits.
- Teams paying with equity. The new 8% regime for stock options is worth a proper look before granting anything; the conditions matter and the planning happens before the grant, not after exercise.
What did not change
The non-dom regime and its 17-year window. The 60-day residency route. The 50% employment income exemption for new residents on higher salaries. VAT registration at €15,600. The absence of inheritance tax. Cyprus adjusted its rates to the international minimum-tax era without touching the pillars that make founders move here, which was fairly clearly the design intent.
Sources and disclaimer
Verified 6 August 2026 against the enacted legislation as summarized by KPMG, Kendris and the Sovereign Group. Conditions apply to several items above, particularly the 8% regime and the €200,000 rule; a regulated Cyprus adviser should confirm treatment for your case. CyprusClarity is a comparison and matching platform, not a tax adviser.