BKR EMEA member firm Eurofast has shared insights on Cyprus’s upcoming tax reform, following the approval by the Cyprus Parliament on 22 December of the most significant changes to the country’s tax system in over 20 years.
These changes will be effective from 1st of January 2026 and will affect both individuals and companies across Cyprus.
Personal Tax
1.Updated Tax Brackets
The tax-free threshold increases from 19,500 to 22,000 with revised tax brackets:
| Chargeable Income | Tax Rate | Cumulative tax |
| 0- 22,000 | 0% | – |
| 22,000-32,000 | 20% | 2,000 |
| 32,000-42,000 | 25% | 2,500 |
| 42,000-72,000 | 30% | 9,000 |
| Over 72,000 | 35% |
2. Family Tax Deductions
New tax deductions are available for families with children (per parent):
- € 1,000 for each parent for the 1st child
- € 1,250 for each parent for the 2nd child
- € 1,500 for each parent for the 3rd and each additional child.
3. Housing and Environmental Deductions
Tax deductions will be available for:
- rent expenses or mortgage interest paid on a primary residence.
- energy updates
- home insurance against nature disasters up to € 500.
Corporation tax:
The corporation tax rate will increase from 12.5% to 15%.
Other taxes
- Deemed dividend distribution will be abolished
- Special defence contribution on actual dividends will be reduced from 17% to 5%
- The loss carry forward period will be changed from 5 to 7 years
How Eurofast can help
The Cyprus tax reform effective from 1 January 2026 introduces important changes for both individuals and companies. Eurofast supports clients in understanding how the new personal and corporate tax rules apply to their specific situation, identifying potential risks and opportunities, and planning ahead to ensure compliance and tax efficiency. Through practical advice and ongoing support, Eurofast helps you navigate the transition smoothly and make informed decisions with confidence.
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