News brief · Taxation

Cyprus: corporate tax raised to 15% under OECD pressure

Cyprus has raised its corporate tax as a result of the global minimum tax. The rate remains among the lowest in the European Union, and the non-dom regime for individuals is unaffected — but the combined cost changes.

By Editorial team · on August 20, 2026

View of Limassol — Photo: Xaris333 — Wikimedia Commons (CC BY-SA)

What the reform changes

Cypriot corporate income tax is raised to 15%¹, compared with 12.5%² under the previous regime.

The previous rate had been in force since 2013 and was one of the jurisdiction's most visible selling points. Its change marks the end of more than a decade of stability.

The cause is external: the international agreement on a minimum tax rate for large multinational groups has led several states to align their national rate with this floor, so that the difference is not collected elsewhere.

The new rate remains among the lowest in the European Union, well below those of Spain at 25%³ or Italy at 24%⁴.

We do not publish the exact date on which the new rate takes effect or the text that introduces it: we have not been able to verify them in an up-to-date official Cypriot source. The financial year from which it applies must be confirmed with the Tax Department.

What the reform does not affect

The non-dom status for individuals is not affected. It continues to exempt passive income — dividends and interest — from the special defence contribution for 17 years⁵ of tax residency.

The contribution to the healthcare system remains payable on this income at a rate of 2.65%⁶, up to an annual ceiling. This is the only charge on a dividend received by a non-domiciled resident.

The exemption of gains on the sale of securities, at a rate of 0%⁷, also remains, as does the income tax scale ranging from 0%⁸ to 35%⁹.

Finally, the deduction for first employment in Cyprus remains: 50%¹⁰ of remuneration is deductible above an annual threshold of more than €55,000¹¹.

What needs to be recalculated

For a company director who receives their income through a Cypriot company, what counts is neither the company's rate nor the individual's, but the combination of the two.

Recalculate the combined cost: corporate income tax at the new rate, then distribution under the non-dom regime.
Check whether the structure falls within the scope of the global minimum tax, reserved for groups exceeding a consolidated turnover threshold.
Check your own tax residency: the general less than 183 days¹² rule, or the from 60 days¹³ rule and its cumulative conditions.
Check how long the non-dom status still has to run, as it is limited in time.
Handle the departure from France according to its own criteria and under the France–Cyprus tax treaty.

The second point rules out most structures: the global minimum tax targets groups whose consolidated turnover exceeds a high threshold. A consultancy or a family holding company does not fall within it, and the increase in the national rate is then the only variable.

What remains uncertain

The open question is what comes next. A state that raises its rate under external pressure does not usually do so once and for all, and European tax harmonisation advances in successive stages.

The non-dom regime itself, which this reform does not affect, is the subject of debate in several member states. The United Kingdom has ended its own non-dom status, a notable precedent for jurisdictions that operate one.

For a French applicant, the practical conclusion is not to give up on Cyprus but to stop reasoning on the basis of a headline rate. What makes the island attractive is the absence of tax on capital gains on securities and the treatment of passive income, not one or two points of corporate tax.

These two advantages are more structural than the rate, and therefore more lasting. They do, however, require genuine residence, which the sixty-day rule allows only under strict, cumulative conditions.

Please note

General information, as of the date shown. A draft reform is not a rule in force: check the conditions with the authorities or a professional before deciding. Terms of use and disclaimers

Sources and verification dates

1.
Cyprus: corporate income tax rate resulting from the tax reform : 15%
« Φόρος πραγματικών μερισμάτων από 17% σε 5% · Κατάργηση λογιζόμενης διανομής μερισμάτων · Εταιρικός φόρος από 12,5% σε 15% · Κατάργηση τελών χαρτοσήμων · Stock Options: ειδικός συντελεστής 8% έως €1εκ./10ετία · Κρυπτοστοιχεία: αυτοτελής φορολόγηση 8% στο καθαρό κέρδος — Portail officiel de la Réforme fiscale 2026 (gov.cy/taxreform), « Avantages fiscaux pour les entreprises » (lois publiées au Journal officiel le 31 décembre 2025, en vigueur au 1er janvier 2026). »
gov.cyVerified on Nov 2, 2026Verified source
2.
Cyprus: former corporate income tax rate, before the tax reform : 12.5%
« Φόρος πραγματικών μερισμάτων από 17% σε 5% · Κατάργηση λογιζόμενης διανομής μερισμάτων · Εταιρικός φόρος από 12,5% σε 15% · Κατάργηση τελών χαρτοσήμων · Stock Options: ειδικός συντελεστής 8% έως €1εκ./10ετία · Κρυπτοστοιχεία: αυτοτελής φορολόγηση 8% στο καθαρό κέρδος — Portail officiel de la Réforme fiscale 2026 (gov.cy/taxreform), « Avantages fiscaux pour les entreprises » (lois publiées au Journal officiel le 31 décembre 2025, en vigueur au 1er janvier 2026). »
gov.cyHistorical value, applicable until January 1, 2026
3.
Spain: standard corporate income tax rate : 25%
« El tipo general de gravamen para los contribuyentes de este Impuesto será el 25 por ciento, excepto para las entidades cuyo importe neto de la cifra de negocios del período impositivo inmediato anterior sea inferior a 1 millón de euros que aplicarán los tipos que se indican en la siguiente escala »
boe.esVerified on Nov 2, 2026Verified source
4.
Italy: corporate income tax rate (IRES) : 24%
« The tax rate of corporate income tax (IRES) is 24%. »
agenziaentrate.gov.itVerified on Nov 2, 2026Verified source
5.
Cyprus: period of tax residency after which a person is deemed domiciled : 17 years
« Furthermore, irrespective of the individual’s domicile of origin, any individual who has been a Cyprus tax resident for income tax purposes for at least 17 out of the last 20 years immediately before the tax year is deemed to acquire a domicile in Cyprus. […] Tax Consequences — Any individual who either: does not have a domicile in Cyprus (non-domiciled), or is not a Cyprus tax resident (non-resident) is not subject to Special Defence Contribution (SDC) on: rental income*; interest income; dividend income. — Tax Department, « Tax Residency/Domicility » (Special Defence Contribution Law N. 117(I)/2002). »
gov.cyVerified on Nov 2, 2026Verified source
6.
Cyprus: rate of the healthcare system contribution on passive income, at full effect : 2.65%
« Income earners (e.g. rent, interest, dividends) 1,70% 2,65% On their income »
gesy.org.cyVerified on Nov 2, 2026Verified source
7.
Cyprus: taxation of profits from the disposal of securities : 0%
« Tax wholly exempted income of: Profit from the sale of securities ; Dividends paid which are tax deductible from the paying co. ; Profits of a Permanent Establishment under certain criteria ; Gains relating to foreign exchange differences (forex) […] — Ministry of Finance, « Tax Incentives » (15 janvier 2026). »
gov.cyVerified on Nov 2, 2026Verified source
8.
Cyprus: rate of the first income tax bracket : 0%
« DECLARATION FOR CLAIMING TAX DEDUCTIONS FOR THE TAX YEAR 2026 - Income Tax (By virtue of the Income Tax Law No.118(I) of 2002, as amended) — PART C. TAX COMPUTATION — Chargeable Income / Tax Rates : From 0 to 22.000 @ 0% ; From 22.001 to 32.000 @ 20 % ; From 32.001 to 42.000 @ 25 % ; From 42.001 to 72.000 @ 30 % ; From 72.001 @ 35 % — Tax Department, formulaire IR59 2026. »
gov.cyVerified on Nov 2, 2026Verified source
9.
Cyprus: top marginal income tax rate : 35%
« PART C. TAX COMPUTATION — Chargeable Income / Tax Rates : From 0 to 22.000 @ 0% ; […] From 42.001 to 72.000 @ 30 % ; From 72.001 @ 35 % — Tax Department, formulaire IR59 2026 (Income Tax Law No.118(I) of 2002, as amended). »
gov.cyVerified on Nov 2, 2026Verified source
10.
Cyprus: share of remuneration deductible for a first employment in the Republic : 50%
« If you are claiming a deduction for first employment in the Republic you are allowed to deduct either (a) 20% of your emoluments from any employment with a maximum of 8.550, or (b) 50% of your emoluments from any employment provided that your salary exceeds 100.000 in the tax year according to circular 2017/4 (EE04), or (c) 50% of your emoluments from any employment provided that your salary exceeds 55.000 in the tax year according to circular 2022/10 and 2024/04. — Tax Department, formulaire IR59 2026, notes (Income Tax Law, art. 8(23A)). »
gov.cyVerified on Nov 2, 2026Verified source
11.
Cyprus: annual remuneration above which the first-employment deduction applies : €55,000
« (c) 50% of your emoluments from any employment provided that your salary exceeds 55.000 in the tax year according to circular 2022/10 and 2024/04. — Tax Department, formulaire IR59 2026, notes. »
gov.cyVerified on Nov 2, 2026Verified source
12.
Cyprus: annual presence below which the general residency rule does not apply : 183 days
« According to Article 2 (“Definitions”) of the Income Tax Law of 2002 (Ν. 118(I)/2002), a natural person (individual) is considered a tax resident of Cyprus if they meet the criteria set out either under the 183-day rule or the 60-day rule. 183-day rule — An individual is considered to reside in Cyprus if they stay in Cyprus for one or more periods exceeding 183 days in total during a tax year. — Tax Department (Ministry of Finance), « Tax Residency/Domicility ». »
gov.cyVerified on Nov 2, 2026Verified source
13.
Cyprus: minimum annual presence under the so-called sixty-day rule : 60 days
« 60-day rule — An individual may be considered a tax resident of Cyprus even if they have not completed 183 days in Cyprus, provided that they meet all of the following conditions: They remain in Cyprus for at least 60 days during the tax year. They do not reside for more than 183 days during the year in another country. They carry on any business in Cyprus and/or are employed in Cyprus, whether as an employee and/or office holder. They maintain a permanent residence in Cyprus which they own or rent. — Tax Department, « Tax Residency/Domicility » (Income Tax Law N. 118(I)/2002, art. 2). »
gov.cyVerified on Nov 2, 2026Verified source