The headline corporate rate rose to 15% while the preferential regimes themselves were left unchanged. Why the effective outcome still shifted for companies relying on them.
- Headline rate increase, preferential regimes untouched
- Dividend tax transition window
- Did the Cyprus corporate tax rate really change in 2026?
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.
What a company pays in Cyprus. Every figure below is published on the Cyprus country page.
| Cyprus | |
|---|---|
| Corporate tax rate | 15% standard (raised from 12.5% on 1 January 2026) · ~3% effective on qualifying IP profit under the IP Box regime |
| VAT standard rate | 19% |
| VAT reduced rates | 9% (hospitality, accommodation, restaurants) and 5% (food, medicines, books, public transport) |
| Accounting standard | IFRS as adopted by the EU (mandatory for all Cyprus companies regardless of size, under Companies Law Cap. 113, s.142) |
| Currency | EUR |
What makes it complex in Cyprus
- 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.
- 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.
Did the Cyprus corporate tax rate really change in 2026?
Yes. The standard corporate income tax rate rose from 12.5% — unchanged since 2013 — to 15% effective 1 January 2026, as part of a wider reform aligning Cyprus with the OECD's global minimum tax under Pillar Two.
Does the IP Box regime still apply after the 2026 reform?
Yes, unchanged in structure: 80% of qualifying intellectual property profit remains exempt under the BEPS Action 5 modified nexus approach. Because that exemption is now calculated against the higher 15% headline rate, the effective tax rate on qualifying IP profit moved from approximately 2.5% to approximately 3%.
Headline rate increase, preferential regimes untouched is one of the points HTLC Network handles for clients operating in Cyprus, within a single engagement that covers every other country they operate in — executed locally, governed centrally.
In Cyprus the scope is: Statutory accounts under IFRS as adopted by the EU (mandatory for all Cyprus companies regardless of size), VAT returns, and corporate tax filings, including IP Box qualifying-profit calculations where relevant.
See Accounting & Tax Compliance in Cyprus for the full scope, or the Cyprus country page for the statutory framework across every service.
Figures as published on the HTLC Network country pages, reviewed September 2026 and collected from public sources. They are not a substitute for advice on a specific case and should be verified before being relied on.