Accounting & Tax Compliance in Cyprus

How accounting and tax compliance work in Cyprus

Cyprus applies a 15% standard corporate income tax rate as of 1 January 2026 (up from 12.5%, unchanged since 2013), alongside a 19% standard VAT rate and employer social contributions of roughly 15.4% of gross salary across Social Insurance, GESY (the national health system), the Social Cohesion Fund, the Redundancy Fund and HRDA. A private limited company (Ltd) has no statutory minimum share capital — €1,000 nominal is common market practice — while a public company (Plc) requires €25,629. Special Defence Contribution (SDC) on dividends paid to domiciled tax residents fell from 17% to 5% for profit earned from 2026 onward, though pre-2026 retained profit distributed on or before 31 December 2031 remains taxed at the old 17% rate.

Cyprus's 2026 tax reform raised the headline corporate rate for the first time in over a decade, leaving the IP Box and Non-Dom regimes as the two structuring levers that now separate a standard 15% tax position from a single-digit effective rate.

Rate structure and what it applies to

15% standard (raised from 12.5% on 1 January 2026) · ~3% effective on qualifying IP profit under the IP Box regime

• Headline rate increase, preferential regimes untouched — — 12.5% → 15% CIT from 1 January 2026 for OECD Pillar Two alignment, but the IP Box (80% exemption, modified nexus, BEPS-compliant) and Non-Dom SDC exemption were not reduced or restricted
• IP Box qualifying-asset test — — only functional/technical IP (in-house software, patents and patent applications) qualifies for the 80% exemption; marketing intangibles and brand value do not, so structuring must be assessed asset by asset
• Dividend tax transition window — — domiciled residents pay 5% SDC on post-2026 profit but 17% on pre-2026 retained profit distributed up to 31 December 2031, requiring profit-year tracking for distribution planning
• Universal audit requirement — — every registered Cyprus company must have audited financial statements, even if dormant; small companies (turnover below €200,000, rising to €300,000 from 6 February 2026) may opt for a lighter ISRE 2400 review instead

Rates that apply in Cyprus

IFRS as adopted by the EU (mandatory for all Cyprus companies regardless of size, under Companies Law Cap. 113, s.142), and when an audit is required

Statutory bookkeeping in Cyprus follows IFRS as adopted by the EU (mandatory for all Cyprus companies regardless of size, under Companies Law Cap. 113, s.142). A statutory audit is mandatory for every registered Cyprus company, including dormant ones; small companies (net turnover under €200,000, rising to €300,000 from 6 February 2026; gross assets under €500,000; for two consecutive years) may opt for a lighter ISRE 2400 (Revised) review instead of a full audit.

Annual accounts and registration

HE32 annual return with audited accounts due within 28 days of the AGM; TD4 corporate tax return due 31 January of the second year following year-end (from the 2026 financial year onward).

Entity registration runs through the Registrar of Companies and Official Receiver (Department of Registrar of Companies and Intellectual Property, Ministry of Commerce, Industry and Tourism), typically taking 2–7 working days for Registrar approval; 4–8 weeks to full operational readiness including bank account and tax registration.

Frequently asked questions