Cyprus Tax Reform Proposals
- Maplebrook Services
- Nov 10, 2025
- 3 min read
Earlier versions of the proposals have been out for public consultation over the summer, attracting objections from professional bodies including from the Cyprus Bar Association, the Institute of Certified Public Accountants of Cyprus and the Chamber of Commerce and Industry. As well as amending the individual tax residency rules, the Bills also grant significant new enforcement powers to the tax authority and impose new taxes on various capital assets.
Crypto-Asset Taxation
A flat 8 per cent tax is being introduced on the sale, donation, exchange, spending or other disposal of all crypto-assets by any natural or legal persons. Losses can be used only to offset crypto gains realised within the same year and cannot be carried forward or offset other income. The only exception is cryptocurrency mining, the profits of which will not be liable to income tax. Crypto-assets are defined as digital assets whose value comes from their market value, as in Regulation (EU) 2023/1114 on markets in crypto-assets.
Corporate Tax Adjustment
The current 12.5 per cent rate of corporation tax for all companies established or registered in Cyprus is to be increased to 15 per cent. This is required by a corresponding EU directive, which is, in turn, derived from the OECD global minimum corporate tax being adopted by all jurisdictions.
Dividend Tax Reform
The deemed dividend tax, which imposes a levy on dividends not actually distributed but deemed by the tax authority to have been distributed, is being repealed. Tax on dividends actually distributed will fall from 17 per cent to 5 per cent. A 5 per cent withholding tax will be imposed on dividends paid to low-tax foreign jurisdictions, although it is officially called a ‘special defence contribution’ (SDC).
Capital Gains Tax Amendments
The capital gains tax (CGT) regime is being amended so that 'property swaps', currently taxed at 20 per cent, will be CGT-free. These transactions occur when a property owner exchanges their property to a developer or equivalent for further construction arrangements.
Special Tax Regime for Non-Domiciled Residents
A special regime is being offered to non-domiciled residents, who can opt for a one-off EUR250,000 lump-sum tax charge covering five years. Alternatively, some will be eligible to pay a fixed annual SDC of EUR50,000 regardless of their income.
Mandatory Filing and Record-Keeping Requirements
Submission of tax returns will become mandatory for all resident individuals aged over 25, regardless of whether they have taxable income.
New Powers for the Tax Authority
Cyprus’ tax department is also being given new powers to request information on taxpayers, regardless of banking or professional confidentiality. It will have authority to request a statement of assets and liabilities covering a period of eight years and taxpayers are required to keep supporting documents for their tax returns going back for the same period. It will also be able to suspend a business' operations and seal its business premises where a person operating the business repeatedly violates tax obligations, fails to issue or issues incorrect invoices/receipts, or obstructs a tax audit. Three written warnings will have to be given first.
Enforcement Measures and Safeguards
If a person refuses, delays or fails to pay tax debts above EUR100,000 for more than 30 calendar days after the payment is due, the tax authority can seize any shares owned by that person as security and freeze their assets.
Clear guidelines and safeguards must be in place to prevent misuse or arbitrary enforcement of these measures, says accountancy firm CYAUSE. 'Without safeguards, there is a risk of exploitation by officials, which could undermine business confidence and create disputes, even when taxpayers are generally compliant', it noted.
Status and Implementation Timeline
The package is still under debate in parliament. If enacted, the Bills will take effect from 1 January 2026.
If you have questions or require any further information about how the proposed changes could affect you, please do not hesitate to contact us for professional advice:
Call us on 26 600780
