The 2025 tax reform package introduces higher corporate and personal tax thresholds, extends key incentives for R&D, imposes new reporting obligations, and abolishes most stamp duties, while also bringing crypto gains and stock options under a new flat tax regime.
The Cyprus parliament passed a major tax reform package on 22 December 2025, introducing higher corporate taxation, expanded personal tax relief, new rules for crypto-asset income, and strengthened compliance mechanisms, alongside targeted incentives to support innovation and investment.
The tax measures are as follows:
Corporate tax
The standard corporate income tax rate is increased from 12.5% to 15%, and the loss carry-forward period is extended from five to seven years.
Deductions for qualifying R&D expenditure
The 120% super-deduction for qualifying research and development expenditure is prolonged until 2030, and the cap on deductible entertainment expenses is raised to EUR 30,000.
Tax rate for crypto-asset disposals
A new flat tax rate of 8% is introduced on gains arising from the disposal of crypto-assets and from stock options granted under approved employer share schemes.
Tackling tax evasion
The reform also strengthens measures to combat tax evasion by introducing a three-strike system for compliance breaches, under which repeated irregularities may result in sanctions, including temporary business closures.
Personal income tax exemption threshold
The personal income tax exemption threshold has been increased from EUR 19,500 to EUR 22,000.
The revised progressive tax bands are as follows:
- income up to EUR 22,000 – 0%
- income between EUR 22,001 and EUR 32,000 – 20%
- income between EUR 32,001 and EUR 42,000 – 25%
- income between EUR 42,001 and EUR 72,000 – 30%
- income exceeding EUR 72,001 at 35%.
Other tax measures
- From 2026 onwards, all residents aged 25 and above will be required to file an annual tax return, regardless of income level.
- Stamp duty is abolished for most transactions, except documents relating to immovable property in the financial and insurance sectors.
- The tax-free threshold for voluntary retirement benefits has been increased to EUR 200,000.
- Proposed reforms to property and business taxation have been suspended.
- The annual non-dom company fee has been reduced from EUR 250,000 to EUR 50,000 for five years to encourage foreign investment.
The new tax reform measures will take effect on 1 January 2026.
Earlier, the Cyprus Council of Ministers approved the tax reform plan on 26 February 2025.
