Cyprus corporate income tax (tax year 2026)

Source-cited draft: not reviewed by an accountant, not for filing.

The Cyprus tax year is the calendar year. The Tax Department (Τμήμα Φορολογίας) administers corporate income tax under the Income Tax Law 118(I)/2002, with filing and payment rules in the Assessment and Collection of Taxes Law 4/1978. The 2026 reform (Income Tax (Amendment) Law 244(I)/2025, the Special Defence Contribution (Amendment) (No. 4) Law of 2025 and Law 243(I)/2025 amending the Assessment and Collection of Taxes Law) applies from 1 January 2026. Figures for tax year 2025 and earlier are different; do not mix them.

Related skills: cyprus-income-tax (individuals), cy-non-dom (domicile and SDC for individuals), cyprus-tax-optimization (planning), cyprus-vat-return, cyprus-payroll, cyprus-social-contributions.

Who this applies to

• Resident companies, from 1 January 2026. The Income Tax Law (article 2, "κάτοικος της Δημοκρατίας") makes a company resident if (i) its management and control is exercised in Cyprus, or (ii) it is incorporated in Cyprus under the Companies Law, unless a double tax treaty provides otherwise. A company that moves its registered office or seat to Cyprus is treated as incorporated in Cyprus. The old condition that the company must not be resident in another state was deleted (Tax Department presentation of Law 244(I)/2025, slide 5).
• Resident companies are taxed on worldwide income (article 5(1)).
• Non-resident companies are taxed on Cyprus-source income, including profits of a permanent establishment in Cyprus (article 5(2)(a)). A non-resident with a Cyprus permanent establishment may elect to be taxed in the same way as a resident (article 5(4)).
• Filing duty. Every company incorporated in Cyprus or resident in Cyprus files a return for every tax year whether or not it had income. A non-resident company files if it had Cyprus-source income under article 5(2), unless all of that income suffered withholding under article 24 (Assessment and Collection of Taxes Law, article 5(1)(c) and (d)).
• Out of scope here. Individuals and partnerships (see cyprus-income-tax). Life insurance companies: the old 1.5% minimum tax on gross premiums was abolished from 2026 (presentation, slide 22), but insurance computations are not covered here. Crypto-asset gains taxed at the special 8% rate (new article 20E) are flagged in "Ask the client first" but not computed.

Rates, bands and thresholds

Item	Rate or amount	Tax year	Source
Corporate income tax rate, every euro of taxable income	15%	2026 onward	Income Tax Law, Second Schedule, para 2: https://www.cylaw.org/nomoi/enop/non-ind/2002_1_118/full.html
Previous rate (for comparison only)	12.5%	2025 and earlier	Tax Department presentation of Law 244(I)/2025, slide 41 (new rate "from 1/1/2026"): https://www.gov.cy/media/sites/167/2026/03/2026-%CE%A6%CE%BF%CF%81%CE%9C%CE%B5%CF%84%CE%B1%CF%81%CF%81%CF%8D%CE%B8%CE%BC%CE%B9%CF%83%CE%B7-%CE%A6%CF%8C%CF%81%CE%BF%CF%82-%CE%95%CE%B9%CF%83%CE%BF%CE%B4%CE%AE%CE%BC%CE%B1%CF%84%CE%BF%CF%82.pdf
Loss carry-forward	7 years (was 5)	Losses usable against 2026 profits onward	Income Tax Law, article 13(1); presentation, slide 18
Group relief ownership test	75%	2026	Income Tax Law, article 13(8)
Interest limitation	Excess borrowing cost above 30% of taxable EBITDA disallowed	2026	Income Tax Law, article 11(16)(a)
Interest limitation safe harbour	EUR 3,000,000 per company or Cyprus group	2026	Income Tax Law, article 11(16)(d)(ii)
IP box deduction	80% of qualifying profits from a qualifying intangible asset	2026	Income Tax Law, article 9(1)(k)
Notional interest deduction (NID) on new equity	Reference rate = 10-year government bond yield of the country where the new equity is invested, plus 5 percentage points, at 31 December of the prior year; capped at 80% of taxable income from the new equity	2026	Income Tax Law, article 9B
Extra deduction for R&D expenditure	20% on top, extended to tax year 2030	2026	Presentation, slide 11
Provisional tax underestimate charge	10% of the shortfall, if provisional taxable income is below 3/4 of the final figure	2026	Assessment and Collection of Taxes Law, article 26(1): https://www.cylaw.org/nomoi/enop/non-ind/1978_1_4/full.html
Late return administrative charge, legal person with turnover or assets above EUR 1m	EUR 500	2026	Assessment and Collection of Taxes Law, article 50A(a)
Late return administrative charge, other legal person	EUR 250	2026	Assessment and Collection of Taxes Law, article 50A(a)
Late payment administrative charge	5% of the unpaid tax, plus a further 5% if still unpaid two months after the due date	2026	Assessment and Collection of Taxes Law, article 50A(e)
Public interest rate on late-paid tax	3.50% a year	Calendar year 2026	Minister of Finance decree K.D.P. 376/2025 (Official Gazette 12 December 2025), in force 1 January 2026: https://www.cylaw.org/KDP/data/2025_1_376.pdf
SDC on dividends received by a resident and domiciled individual, out of profits of 2026 onward	5%	2026	SDC presentation, slide 8: https://www.gov.cy/media/sites/167/2026/03/EEA-%CE%A6%CE%9A%CE%9A-%CE%9C%CE%95%CE%A4%CE%91%CE%A1%CE%A1%CE%A5%CE%98%CE%9C%CE%99%CE%A3%CE%97-06032026.pdf
SDC on dividends from Cyprus companies out of profits up to tax year 2025, received up to 31/12/2031	17%	2026	SDC presentation, slide 8
Deemed dividend distribution: share of 2024 and 2025 profits deemed paid two years after year end	70%, taxed at 17% SDC	Profits of 2024 and 2025 only	SDC presentation, slide 30; SDC Law 117(I)/2002, article 3C: https://www.cylaw.org/nomoi/enop/non-ind/2002_1_117/full.html
SDC on a disguised dividend distribution (new article 3A)	10%	2026	SDC presentation, slide 21
Outbound dividend to a company in a low-tax jurisdiction	5%	From 1 January 2026	SDC Law, article 3(1)(d)(i)(aa) and commencement note to Law 48(I)/2025
Outbound dividend to a company in an EU-listed non-cooperative jurisdiction	17%	2026	SDC Law, article 3(1)(d)(i)(bb)
Low-tax jurisdiction test	Third country with a corporate rate below 50% of the Cyprus rate (so below 7.5% at the 15% rate)	2026	SDC Law, article 2; Income Tax Law, article 2
Pillar Two	Cyprus has a law implementing Directive (EU) 2022/2523 for in-scope groups; this skill does not compute top-up tax	2026	Presentation, slide 38 (names the law); Income Tax Law, article 35(11)

There is no small-company rate, no local or trade tax on corporate profit, and no minimum tax in the Income Tax Law. SDC is not a tax on the company's profit; for a company it matters as a withholding duty and, for 2024 and 2025 profits, the deemed distribution.

The taxable base

Start from the profit in the financial statements and adjust:

1. Add back accounting depreciation, fines, and expenses not wholly and exclusively incurred for the business (article 11). Business entertainment is deductible up to 1% of gross business income, capped at EUR 30,000 (article 11(12), proviso). No deduction for salaries on which the employer's social insurance, redundancy, HRDA, social cohesion, pension or GHS (Health Insurance Fund) contributions were not paid; they become deductible if the contributions are paid in full within two years of their due date (article 9(1A)(ii)). No deduction for rent on Cyprus property paid other than by bank transfer, debit or credit card or another recognised electronic means (article 9(1A)(iii); Assessment and Collection of Taxes Law, article 48A). No deduction for interest on buying shares in a wholly owned subsidiary resident in a non-cooperative jurisdiction (slide 17).
2. Payments to associated low-tax companies. Royalties, and interest paid to an associated company (over 50% link) resident in a low-tax jurisdiction, are not deductible (article 11(17)).
3. Deduct capital allowances under article 10 instead of depreciation. Capital expenditure on intangible assets with an indefinite useful life is now spread over 20 years (article 9(1)(l), proviso). Assets brought in for shares are capped at market value (slides 12 and 16).
4. Exempt income. Dividends received are exempt from income tax (article 8(20)), except to the extent the dividend was deductible for the paying company. Gains on disposal of securities ("τίτλοι") are exempt (article 8(22)). Gains on Cyprus immovable property, and on shares in companies holding it, fall under Capital Gains Tax instead; from 2026 shares count as property if at least 20% (was 50%) of their market value comes from Cyprus immovable property (Capital Gains Tax Law 52/1980, article 2, consolidated on CyLaw).
5. Dividends received and SDC. A resident company pays 5% SDC on a dividend from a non-resident company only if the payer is more than 50% engaged in investment-income activities and its foreign tax burden is below 50% of the Cyprus burden (SDC Law, article 3(1)(c)). Transitional 17% SDC on dividends from other Cyprus-resident companies (SDC Law, article 3(1)(b)): on dividends received in 2026 out of 2024 profits, and in 2026 or 2027 out of 2025 profits; and on dividends received indirectly more than four years after the profit year, for profits up to 2023, until six years after the 2025 amendment took effect. The dividend is reduced by amounts already deemed distributed, and the part that traces to dividends already charged to SDC, or to an individual not resident in Cyprus on the payment date, is exempt. Companies are no longer listed as liable to SDC on interest received; the 17% charge on interest now applies to individuals and to exempt charitable, educational and sporting bodies (SDC Law, article 3B(a)).
6. NID. Deduct the notional interest on new equity (article 9B): new equity (share capital and share premium paid in on or after 1 January 2015, not from pre-2015 reserves) times the reference rate, capped at 80% of taxable income arising from that new equity. No NID if the new equity produces a loss. The company may waive all or part of it each year. NID is treated as interest for the interest limitation.
7. IP box. 80% of qualifying profits from a qualifying intangible asset are deductible (article 9(1)(k)), so the effective rate on them is 15% x 20% = 3%.
8. Interest limitation (article 11(16)). Excess borrowing cost above 30% of taxable EBITDA is disallowed, with a EUR 3m per-company or per-Cyprus-group safe harbour. Disallowed excess and unused capacity carry forward 5 years. Brought-forward losses are ignored when computing EBITDA. An equity-ratio escape is available for members of an accounting consolidated group. The rule does not apply to a standalone entity or to financial undertakings (article 11(16)(e)).
9. Losses (article 13). A company that must keep audited accounts carries forward a tax loss for 7 years from the end of the year in which it arose. No carry-back. The Tax Department's example: a 2019 loss can be set against 2026 profits, but a 2018 loss expired after 2023 and cannot be used in 2026 (slides 19 and 20). Losses are lost after a change of more than half of the ownership combined with a major change in the business within three years (article 13(1)). No loss is allowed for a year whose accounts are filed more than six years late (article 13(3)).
10. Group relief (article 13(4) to (8)). A current-year trading loss can be surrendered between Cyprus-resident companies that are 75% group members for the whole tax year. The claimant first uses its own brought-forward losses, then the surrendered loss (article 13(7), clarified from 2026). Only current-year losses can be surrendered. An EU subsidiary's loss can be surrendered if it has exhausted relief in its own state.
11. Tax = taxable income x 15%, less double tax credit (article 35) and provisional tax paid.

Deadlines and filing

Step	What and when	Source
Provisional tax estimate	Company files its own estimate of taxable income for the year by 31 July of that year; it may revise it up to 31 December	Assessment and Collection of Taxes Law, article 24
Provisional tax payments	Two equal instalments, 31 July and 31 December of the tax year. A company incorporated or becoming resident after 30 June files the estimate and pays in one instalment by 31 December	Article 38(1)(c) and article 24
Annual return (IR4 / T.D.4)	For a company that must have audited accounts, by 31 January of the second year after the tax year. For tax year 2026: 31 January 2028	Article 5(1A), first proviso
Final tax (balance due under self-assessment)	From tax year 2026, by 31 January of the second year after the tax year: 31 January 2028 for 2026. Interest runs from 1 February 2028	Article 38(1)(a), proviso for 2026 onward; article 13(1), second proviso; article 39
Tax year 2025 and earlier	Payment date was 1 August of the following year; the 2020 to 2025 filing date was 31 March of the second year after the tax year	Article 38(1)(a) and 39, provisos for 2020 to 2025
Extensions	The Council of Ministers may extend filing or payment dates by decree; the Commissioner may announce a later filing date, in which case no late-filing charge applies	Article 5(1A), second proviso; article 50A(a) proviso

The return is filed electronically with the Tax Department. Check the Tax Department's current announcements for any extension before the deadline.

Penalties and interest

• Late return. Administrative charge of EUR 500 for a legal person whose turnover or assets exceed EUR 1,000,000, and EUR 250 for any other legal person (article 50A(a)). Not charged if the return is filed within a later deadline announced by the Commissioner for all taxpayers.
• Late payment interest. Unpaid tax carries interest under the Uniform Public Interest Rate Law from the due date on the original amount (article 39(1), as amended by Law 243(I)/2025). The rate for 2026 is 3.50% a year (decree K.D.P. 376/2025). For tax year 2026, interest on the final tax runs from 1 February 2028 (article 39, proviso for 2026 onward).
• Late payment charge. Separately, tax not paid by the due date attracts an administrative charge of 5% of the tax due, and a further 5% if it is still unpaid two months after the due date (article 50A(e), as it stands after Law 243(I)/2025). The charge is not imposed where the tax due under a return is paid when the return is filed within a later deadline announced by the Commissioner for all such taxpayers.
• Provisional tax too low. If provisional taxable income is below three quarters of the final taxable income, the company pays an extra 10% of the difference between the final tax and the provisional tax paid or payable (article 26(1)). If no estimate was filed, provisional taxable income is treated as zero.
• SDC. SDC withheld or due and not paid on time attracts a 5% charge, plus a further 5% if still unpaid after two months (SDC Law, article 7B(e)). Breaches with no specific penalty carry a fine of up to EUR 1,000 (SDC Law, article 6(3)).

Cross-border points

• Dividends paid to non-residents. No SDC or income tax is withheld on dividends to non-resident shareholders in general. Two exceptions under SDC Law article 3(1)(d): 5% where the recipient company is resident in (or incorporated in and not resident elsewhere outside) a low-tax jurisdiction, from 1 January 2026; and 17% where it is resident in an EU-listed non-cooperative jurisdiction. If a jurisdiction is both, 17% applies. Both apply only where the paying and receiving companies are associated (over 50% of votes, capital or profit entitlement, directly or indirectly, alone or with connected persons, either way round or through a common owner), and not to dividends on securities listed on a recognised stock exchange where the payer cannot reasonably know the holder is associated (SDC Law, article 3(1)(d)(ii) and (iii)).
• Interest paid to non-residents. No withholding in general. 17% SDC on interest paid to an associated (over 50%) company resident in an EU-listed non-cooperative jurisdiction (SDC Law, article 3B(c)).
• Royalties. 10% withholding on royalties paid to a non-resident for use of the right in Cyprus (Income Tax Law, article 21; "δέκα σεντ κατά λίρα"); exempt where paid to an associated EU company (25% holding) under the Interest and Royalties Directive provisions. 10% on royalties paid to an associated company in a non-cooperative jurisdiction (article 21A), not where article 21 withholding already applied. Treaties may reduce the rate.
• EU directives. The Parent-Subsidiary rules sit in the dividend exemption and the absence of dividend withholding; the Interest and Royalties Directive in the article 21 proviso; ATAD in articles 11(16) (interest), 33A (general anti-abuse rule, extended in 2026 to transactions involving individuals), 33B (exit tax) and 36A (CFC).
• CFC rules (article 36A). A foreign subsidiary (over 50% held) or a foreign permanent establishment is a CFC if its actual tax is below 50% of the Cyprus tax that would apply. Its undistributed income from non-genuine arrangements set up to obtain a tax advantage is added to the Cyprus parent's income. Exclusions: accounting profits up to EUR 750,000 with non-trading income up to EUR 75,000, or accounting profits up to 10% of operating costs.
• Exit tax (article 33B). On a transfer of assets out of Cyprus, a change of tax residence, or a transfer of a Cyprus permanent establishment's business, the gap between market value and tax value is added to income. From 2026, assets arriving from a third country take the third-country exit value as their base unless it does not reflect market value (presentation, slide 37).
• Transfer pricing. Article 33 requires arm's length pricing. A Cyprus local file is not required below EUR 10,000,000 for financing transactions, EUR 5,000,000 for goods and EUR 2,500,000 for other transactions (presentation, slide 35).

Worked examples

Example 1: trading company, tax year 2026

Alpha Trading Ltd is managed and controlled in Cyprus. Its 2026 accounts show a profit before tax of EUR 400,000. That includes depreciation of EUR 30,000, a non-deductible fine of EUR 2,000, a dividend of EUR 20,000 from a foreign subsidiary (exempt, not deducted by the payer) and a gain of EUR 15,000 on selling listed shares (exempt). Capital allowances are EUR 25,000. It paid provisional tax of EUR 26,000 on 31 July 2026 and EUR 26,000 on 31 December 2026.

Taxable income is 400,000 + 30,000 + 2,000 - 25,000 - 20,000 - 15,000 = EUR 372,000. Tax at 15% is EUR 55,800. Provisional tax paid is EUR 52,000, which is above three quarters of the final tax (EUR 41,850), so there is no 10% charge. The balance of EUR 3,800 is due by 31 January 2028 with the IR4.

name: Alpha Trading Ltd, 2026, 15% rate, exempt dividend and securities gain
inputs:
  accounting_profit: 400000
  depreciation: 30000
  fine: 2000
  capital_allowances: 25000
  exempt_dividend: 20000
  exempt_securities_gain: 15000
  provisional_paid: 52000
steps:
  - taxable: accounting_profit + depreciation + fine - capital_allowances - exempt_dividend - exempt_securities_gain
  - tax: taxable * 0.15
  - three_quarters_test: tax * 0.75
  - shortfall_below_test: max(0, three_quarters_test - provisional_paid)
  - balance_due: tax - provisional_paid
expected:
  taxable: 372000
  tax: 55800
  three_quarters_test: 41850
  shortfall_below_test: 0
  balance_due: 3800

Example 2: losses brought forward, group relief and a low provisional estimate

Beta Holdings Ltd has taxable income of EUR 500,000 for 2026 before losses. It has unused tax losses of EUR 50,000 from 2018 and EUR 120,000 from 2019. Its 75% sister company Gamma Ltd made a trading loss of EUR 80,000 in 2026 and surrenders it under group relief. Beta estimated its income low and paid provisional tax of EUR 30,000.

Under the 7-year rule the 2018 loss expired after 2023 and cannot be used; the 2019 loss can be used in 2026 (Tax Department example, slides 19 and 20). The 2018 loss of EUR 50,000 is left out of the calculation. Beta uses its own 2019 loss first, then Gamma's loss: 500,000 - 120,000 - 80,000 = EUR 300,000. Tax at 15% is EUR 45,000. Three quarters of that is EUR 33,750. The provisional tax of EUR 30,000 is below it, so a charge of 10% of (45,000 - 30,000) = EUR 1,500 applies. Total due by 31 January 2028: 15,000 + 1,500 = EUR 16,500.

name: Beta Holdings Ltd, 2026, 7-year losses, group relief, provisional underestimate
inputs:
  income_before_losses: 500000
  loss_2019: 120000
  group_relief_from_gamma: 80000
  provisional_paid: 30000
steps:
  - after_own_losses: max(0, income_before_losses - loss_2019)
  - taxable: max(0, after_own_losses - group_relief_from_gamma)
  - tax: taxable * 0.15
  - three_quarters_test: tax * 0.75
  - shortfall_below_test: max(0, three_quarters_test - provisional_paid)
  - underestimate_charge: (tax - provisional_paid) * 0.10
  - balance_due: tax - provisional_paid + underestimate_charge
expected:
  after_own_losses: 380000
  taxable: 300000
  tax: 45000
  three_quarters_test: 33750
  shortfall_below_test: 3750
  underestimate_charge: 1500
  balance_due: 16500

Ask the client first

1. Where is the company incorporated, and where do the board meet and take decisions? Does a treaty tie-breaker apply?
2. Which tax year is this? 2026 uses 15% and the 7-year loss rule; 2025 and earlier use 12.5% and different payment dates.
3. Does the company hold new equity introduced since 2015, qualifying IP, or net interest cost near EUR 3m?
4. Are there unused losses, and in which years did they arise? Is the company in a 75% group with loss-making Cyprus companies?
5. Who are the shareholders: Cyprus-resident and domiciled individuals (SDC on dividends and the 2024 and 2025 deemed distribution), or foreign companies in low-tax or non-cooperative jurisdictions (5% or 17% on dividends)?
6. Does a shareholder or connected person use company assets privately (10% SDC on a disguised distribution)?

Sources

Source	URL	Read on
Income Tax Law 118(I)/2002, consolidated text including Law 244(I)/2025 (CyLaw)	https://www.cylaw.org/nomoi/enop/non-ind/2002_1_118/full.html	2026-10-22
Special Defence Contribution Law 117(I)/2002, consolidated text (CyLaw)	https://www.cylaw.org/nomoi/enop/non-ind/2002_1_117/full.html	2026-10-22
Assessment and Collection of Taxes Law 4/1978, consolidated text including Law 243(I)/2025 (CyLaw)	https://www.cylaw.org/nomoi/enop/non-ind/1978_1_4/full.html	2026-10-22
Tax Department presentation: Income Tax (Amendment) Law 244(I)/2025	https://www.gov.cy/media/sites/167/2026/03/2026-%CE%A6%CE%BF%CF%81%CE%9C%CE%B5%CF%84%CE%B1%CF%81%CF%81%CF%8D%CE%B8%CE%BC%CE%B9%CF%83%CE%B7-%CE%A6%CF%8C%CF%81%CE%BF%CF%82-%CE%95%CE%B9%CF%83%CE%BF%CE%B4%CE%AE%CE%BC%CE%B1%CF%84%CE%BF%CF%82.pdf	2026-10-22
Tax Department presentation: SDC (Amendment) (No. 4) Law 2025 and CGT (Amendment) (No. 3) Law 2025	https://www.gov.cy/media/sites/167/2026/03/EEA-%CE%A6%CE%9A%CE%9A-%CE%9C%CE%95%CE%A4%CE%91%CE%A1%CE%A1%CE%A5%CE%98%CE%9C%CE%99%CE%A3%CE%97-06032026.pdf	2026-10-22
Capital Gains Tax Law 52/1980, consolidated text (CyLaw)	https://www.cylaw.org/nomoi/enop/non-ind/1980_1_52/full.html	2026-10-22
Minister of Finance decree K.D.P. 376/2025, public interest rate for 2026 (Official Gazette Part III(I), No. 5986, 12 December 2025)	https://www.cylaw.org/KDP/data/2025_1_376.pdf	2026-10-22

The gov.cy PDFs refuse automated downloads (HTTP 403); they were read in a browser on 2026-10-22. Article references to the laws are to the Greek consolidated texts on CyLaw, which are not the official gazette.

Not yet confirmed: the 10-year government bond yields used for the 2026 NID reference rate; the Capital Gains Tax rate (not read for this skill); the name of the e-filing portal for the IR4; whether any decree has extended the 2025 or 2026 filing dates; the number and in-force date of the Pillar Two law.

Contributed by Ryan Duguid.