Cyprus Taxes: Income Tax, Corporate Tax, and Non-Dom Benefits in 2026

The Cyprus tax system is administered by the Cyprus Tax Department, which operates under the Ministry of Finance. It is responsible for collecting personal income tax, corporate tax, capital gains tax, VAT, and social insurance contributions.

Before looking at the tax-residence rules, it helps to separate three concepts that are often confused:

1. Cyprus residence permit: This is your immigration status.
2. Cyprus tax residence: This is your tax status, based on the time you spend in Cyprus and your ties to the country.
3. Cyprus domicile: This affects your exposure to Special Defense Contribution (SDC), explained below.

Cyprus tax residency 

The 183-day test: You are a Cyprus tax resident if you spend more than 183 days in Cyprus during a calendar year, based on the official day-count rules.

The 60-day test: an alternative for people who are internationally mobile. From 1 January 2026, you must:

• Spend at least 60 days in Cyprus during the calendar year.
• Spend no more than 183 days in any other single country during that year.
• Carry on a business in Cyprus, be employed in Cyprus, or hold an office in a Cyprus tax-resident company, and that business, employment or office must continue throughout the tax year.
• Maintain a permanent home in Cyprus, whether owned or rented.

The 60-day test no longer requires you to not be tax resident in another country. This separate condition was removed. However, if you are tax resident in more than one country, the relevant tax treaty tie-breaker rules may still need to be applied to determine where you are ultimately taxed.

Under the personal income tax rules effective from 1 January 2026, the first €22,000 of chargeable income is tax-free, and income above that is taxed progressively up to 35%.

Another notable change is that rental income is no longer subject to the Special Defense Contribution (SDC). Before, rental income was split between the two different laws, Income tax and SDC.

Although the tax-free limit has increased, Cyprus residents still need to pay social insurance and national healthcare contributions in addition to income tax:

• Social insurance: Employees pay 8.8% of their salary, capped at €68,904 of annual insurable earnings for 2026. Nothing further is due above this amount according to the Cyprus Social Insurance Services.
• GESY (National Healthcare System): Employees contribute 2.65%, capped at €180,000 of annual income.
• Retirement and severance lump sums: A genuine retirement gratuity is fully tax-exempt. Separately, an ex-gratia lump sum paid at the start or end of employment is tax-free up to €200,000 under the 2026 reform’s Article 20F. Any amount above €200,000 is taxed at a flat 20% under the Cyprus tax 2026 reform update. These are two different rules, so it is important to check which one applies to your particular payout.

The corporate tax rate in Cyprus is 15% from 1 January 2026, up from the previous rate of 12.5%. It applies to a company’s net profits after deductions. Under the 2026 tax reform, business losses can now be carried forward for up to 7 years, instead of 5, to reduce future taxable profits.

These corporate tax rules apply to companies, not individuals. Your personal tax position as an employee, director, or shareholder is governed separately by the personal income tax and SDC rules, under the Cyprus Tax Reform 2026 guide.

• Stamp duty: Stamp duty was repealed on corporate and commercial documents, including contracts and loan agreements, as of 1 January 2026.
• Intellectual property (IP): Cyprus has an IP Box regime for companies that earn income from qualifying IP, such as software, patents, or other innovations. The regime has its own qualifying conditions, so if it applies to you, it should be reviewed with a tax advisor rather than relying on the headline rate.

The Special Defense Contribution (SDC) is a separate tax from personal income tax. It applies to certain passive income, including dividends and specific types of interest, earned by individuals who are both Cyprus tax residents and Cyprus domiciled, as well as by Cyprus-based companies. Rental income is no longer subject to SDC and is now taxed under personal income tax instead.

Cyprus non-dom status can exempt qualifying tax residents from SDC on dividends and interest. However, it is not a general exemption from income tax, GHS contributions, or tax owed in another country. Whether you qualify for non-dom status and what it means for your specific situation depends on your domicile history.

2026 SDC rates for domiciled tax residents:

Capital Gains Tax (CGT) in Cyprus is charged at a flat rate of 20% on gains from selling immovable property located in Cyprus, as well as on shares in companies that own Cyprus property, subject to available exemptions. Under the 2026 rules, a company is considered “property-rich” if at least 20% of its asset value comes from Cyprus real estate. This means that selling shares in such a company can be treated like a property sale for CGT purposes.

From 1 January 2026, gains from disposing of crypto-assets covered by Article 20E of the tax law are taxed at a flat 8%, whether or not the disposal is made as part of a business.

Taxable disposals broadly include:

• Selling crypto-assets
• Gifting crypto-assets
• Exchanging one crypto-asset for another
• Using crypto as a means of payment

There are a few important exceptions. Crypto-assets acquired through mining are not covered by this special 8% treatment. Losses from crypto disposals can be used to offset crypto gains made by the same person in the same tax year, but they cannot be carried forward to future years or transferred through group relief

• 0% on dividends and interest: Non-doms pay no Special Defense Contribution on dividends or interest income from anywhere in the world.
• Non-dom period & extension: The country has a Cyprus Non-Domestic Tax Residence Program with several tax exemptions. The regime lasts 17 years, with an option to extend for two additional 5-year periods by paying a €250,000 lump sum per period.
• No tax on most capital gains: Most profits made from selling securities like shares and bonds are tax-free.
• No wealth, inheritance, or gift taxes: Cyprus does not charge any wealth, inheritance, or gift taxes, which can be a huge benefit for anyone looking into estate planning and wealth protection.
• Salary tax relief for new residents: New tax residents, as well as non-doms, can get a 50% income tax exemption on salaries over €55,000 for up to 17 years.
• Low tax on foreign pensions: Foreign pensions are taxed at 5% on amounts over €5,000 per year.

To qualify for some of the tax exemptions Cyrpus offers, you first need to gain residency, and this is possible through programs such as the Cyprus Golden Visa, which allows you to obtain permanent residency through investing in real estate worth at least €300,000, or you can also invest in shares of a business that employs at least five people or by contributing to a Cyprus Collective Investment Organization.

Cyprus also offers the Cyprus Digital Nomad Visa, which is best for remote workers who work for companies outside of the country. If you have clients outside Cyprus, or if you are self-employed or a freelancer, you must also earn at least €3,500 per month.

However, even with these residence permits, you must first become a tax resident in Cyprus to qualify for the tax benefits.

Cyprus has double tax treaties with over 60 countries to ensure that the same income is not taxed twice. In 2026, Cyprus amended these agreements to guarantee they align with global tax rules, including the OECD 15% minimum tax rules. Therefore, tax treaties in the country are mostly based on international OECD rules, and some of the most common include: 

• Withholding tax on cross-border payments is reduced or removed. 
• Interest is either taxed at 0% or limited to 5% or 10%
• Royalties are taxed at 0% or at a very low rate.