Cyprus tax reform 2025–2026: key changes for corporate structures

At the end of October 2025, the Cypriot Government submitted to Parliament a package of tax reform bills, with most measures expected to apply from 1 January 2026 if enacted. The proposals bring the framework closer to international standards and adjust how profits, distributions and certain types of income are taxed.

Headline changes

Corporate income tax:

corporate tax increases from 12.5% to 15% for tax periods starting in 2026.

Loss carry-forward:

the carry-forward period for tax losses is extended from 5 to 7 years, partly offsetting the higher rate.

Dividends and SDC:

deemed dividend distribution is abolished for profits arising after 31 December 2025. For actual dividends linked to post-2025 profits, the Special Defence Contribution rate is reduced from 17% to 5%.

Rental income:

SDC on rental income is removed; rental income remains subject only to income or corporate tax, as applicable.

Cryptoassets:

an 8% tax is introduced on gains from the disposal of cryptoassets that are treated as revenue in nature.

Practical implications

For groups with Cyprus holding or operating entities, the reforms affect:
• forecast effective tax rates from 2026 onwards
• dividend and profit distribution policies and timing
• payment flows involving low-tax or blacklisted jurisdictions
• the treatment and documentation of crypto-related activity

These changes set a new baseline for Cyprus-based holding and operating entities. OpiniQ provides advisory support on the design and maintenance of such structures in this context, including scenario analysis under the new rules, review of dividend and payment chains, and updates to internal documentation and policies where required.