The headline rates
If you are a Cyprus tax resident in 2026, these are the figures you will meet most often. Personal income is taxed on a progressive scale that starts at 0% and tops out at 35%, with nothing due on the first €22,000 you earn. Companies pay a flat 15% on profits. Buy or sell Cyprus property and you run into VAT, usually 19% but sometimes 5%, and capital gains tax at 20%. Employment income also carries social insurance and health contributions on top of income tax.
The date that matters this year is 1 January 2026. A tax reform, approved by the House of Representatives on 22 December 2025 and published in the Official Gazette on 31 December, changed several of these numbers at once. Anything you read from 2024 or 2025 about Cyprus rates may already be stale.
Income tax: the 2026 bands
Personal income tax runs on progressive bands under the Income Tax Law of 2002 (Law 118(I)/2002). Progressive means moving into a higher band only taxes the slice of income above the threshold, not the whole amount.
| Chargeable income | Rate |
|---|---|
| First €22,000 | 0% |
| €22,001 – €32,000 | 20% |
| €32,001 – €42,000 | 25% |
| €42,001 – €72,000 | 30% |
| Over €72,000 | 35% |
The reform lifted the tax-free threshold from €19,500 to €22,000 and widened the bands above it, so most workers pay a little less than they did in 2025. To model your own figure, use the Cyprus income tax calculator.
Two special regimes sit alongside these bands. A pension from abroad can be taxed either on the normal scale or at a flat 5% on the amount above €5,000 a year, whichever you elect, which usually suits a UK state or occupational pension. And someone taking up their first employment in Cyprus on more than €55,000, who was not tax resident here for the 15 years before, can exempt 50% of that salary for up to 17 years.
Corporate tax: now 15%
Companies that are tax resident in Cyprus, meaning managed and controlled from the island, pay corporation tax at 15% on their worldwide profits. The rate rose from 12.5% on 1 January 2026, bringing Cyprus into line with the OECD global minimum tax that large multinational groups already face. It remains one of the lower headline rates in the EU.
The 12.5% era is over, but most of what made the regime attractive survives: no withholding tax on the majority of outbound dividends, interest and royalties, a participation exemption on qualifying dividends received, and the intellectual-property box that can cut the effective rate on qualifying IP profit well below 15%. Our Cyprus corporate tax guide sets out how a company is actually taxed.
VAT: 19%, with a 5% door for first homes
VAT applies at a standard 19% on most goods and services under the VAT Law of 2000. Reduced rates of 9% (hotels, restaurants, local passenger transport), 5% (food, books, medicines and more) and 3% apply to defined categories, alongside a zero rate on exports.
The rate most buyers ask about is property. A new-build home carries 19% VAT. A first-time buyer using it as their main residence can claim the reduced 5% rate on the first 130 m² of buildable area, provided the property is worth no more than €350,000 and its total area stays within 190 m². The standard rate applies to anything above those limits. Resale homes that have already borne VAT once are generally outside the charge, though transfer fees then come into play instead.
Capital gains tax: 20%, but only on property
Cyprus capital gains tax is narrower than the name suggests. Under the Capital Gains Tax Law (Law 52 of 1980), the 20% rate falls only on gains from selling immovable property in Cyprus, or shares in unlisted companies that own Cyprus immovable property. Sell shares, bonds, foreign real estate or crypto and there is no Cyprus CGT at all. That single feature is why many investors hold assets through a Cyprus structure.
Several lifetime exemptions reduce a property bill: €150,000 on the sale of a private residence you have lived in, €50,000 on agricultural land sold by a farmer, and €30,000 on any other disposal, capped at €150,000 across a lifetime. The original purchase cost, transfer fees and inflation indexation come off the gain as well. The capital gains tax calculator works through a disposal.
Social insurance and health contributions
Salary carries two separate charges on top of income tax, and they catch people out because they are billed and calculated apart from the tax return.
Social insurance is 8.8% from the employee and a matching 8.8% from the employer in 2026, on earnings up to an annual cap of €68,904. The self-employed pay 16.6% on notional income set by occupation. These contributions fund the state pension and unemployment benefit.
The General Healthcare System, known as GeSY, is billed separately: 2.65% from employees, 2.90% from employers, 4.0% for the self-employed and 2.65% on pensions, on income up to €180,000 a year. GeSY registration gives access to the national health service, which the gesy.org.cy portal administers.
Dividends, and where non-doms fit
For most residents the tax on dividends is the Special Defence Contribution. The reform cut the SDC on dividends paid to Cyprus tax-resident and domiciled individuals from 17% to 5% on profits earned from 2026 onward, a meaningful drop for owner-managers taking money out of a company.
Non-domiciled residents sit outside SDC entirely. Someone who qualifies as Cyprus tax resident but not domiciled here pays no SDC on dividends or interest for their first 17 years, which is the core of the well-known non-dom regime. How you become resident, including the 60-day rule, is covered in our guide to tax residency and the non-dom status.
One more figure worth flagging: the reform introduced a flat 8% income tax on gains from cryptoasset transactions, giving crypto its own clear rate for the first time rather than leaving it to argument over trading versus investment.
Rates change, reliefs carry conditions, and how any of this applies to you depends on your residence, domicile and the exact source of your income. Treat the numbers here as the current shape of the system, not as advice on your own return.
Sorting out your Cyprus tax position? Run the figures through our tax tools, then confirm the detail with a tax and wealth adviser from the directory before you file or restructure.