The Cyprus Tax Reform Team presented its tax proposals to key stakeholders at the Presidential Palace on 26 February 2025. The proposals will soon be open for public consultation before being submitted to the Council of Ministers for approval and voted on by parliament.
The key proposed tax measures related to corporate tax, personal income tax, golden handshakes, abolishing the insurance premium tax, capital gains tax, and stamp duty.
Some of these proposed tax measures are anticipated to take effect starting in the 2025 tax year, while others are expected to be implemented beginning in 2026.
Proposed amendments
Corporate income tax rate
The corporate income tax rate is set to rise from 12.5% to 15% and applies to all corporations.
Tax loss carryforward proposal
Tax losses can be carried forward for up to 10 years instead of the existing 5 years. However, the loss utilization after 5 years will be limited to a percentage of the company’s taxable profit.
New anti-abuse rulesÂ
New anti-abuse regulations are set to take effect for closely held companies.
Insurance premium tax
The 1.5% insurance premium tax will be eliminated.
Stock options
Stock options could qualify for reduced tax rates, provided certain conditions are met, and anti-abuse rules are implemented.
Stamp duty
Stamp duty applies only to immovable property, banking, and insurance agreements.
Special defence contribution (SDC)
The SDC rate applies to dividends earned by Cyprus-tax residents and domiciled individuals will be reduced from 17% to 5%.
Personal income tax
| Taxable income (EUR) | Personal income tax rate |
| Up to 20,500 | 0% |
| 20,501 – 30,000 | 20% |
| 30,001 – 40,000 | 25% |
| 40,001 – 80,000 | 30% |
| Over 80,000 | 35% |
Other tax provisions
- A 50% personal income tax deduction for individuals taking up their first employment in Cyprus;
- Full exemption from the Special Defence Contribution (SDC) for Cyprus tax residents who are non-domiciled;
- Notional interest deduction incentives;
- An intellectual property box regime to encourage innovation;
- A tonnage tax regime for the shipping industry;
- Donations to cultural activities would be deductible.
- Cryptocurrency trading profits will be taxed if considered revenue-generating.
