When did the Cyprus tax reform take effect?

On 1 January 2026. Parliament approved it on 22 December 2025 and it was published in the Government Gazette on 31 December 2025.

Did non-dom change in 2026?

The exemption itself didn't change. Non-doms still pay 0% SDC. The reform added an option to extend non-dom beyond 17 years by paying €250,000 per five-year period, for up to two periods.

Is Cyprus still attractive for UK expats after the reform?

For most individuals, yes: personal tax fell and non-dom survived. Company owners pay 15% corporation tax instead of 12.5%, so the saving on business profits is smaller.

Did capital gains tax change in Cyprus in 2026?

The 20% rate didn't, but the lifetime exemptions rose: €150,000 on the sale of your main home, €50,000 for farmers' agricultural land and €30,000 on other disposals.

Did the Cyprus tax reform change the 50% exemption for new employees?

No. The 50% exemption on salaries of at least €55,000 still lasts 17 years for people who weren't Cyprus resident for the previous 15 years.

Cyprus Tax Reform 2026: What Changed for UK Expats

Cyprus Tax Reform 2026: What Changed for Expats, and What Didn't

Cyprus's biggest tax overhaul in years took effect on 1 January 2026. Most British movers pay less: the tax-free band rose to €22,000, the 60-day rule got simpler and rental SDC went. Company owners pay more, because corporation tax rose to 15%.

JJason 9 min read Last verified 27 September 2026

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The short version

Passed by Parliament on 22 December 2025, in force from 1 January 2026.

Winners: employees and pensioners (wider bands, €22,000 tax-free), families (new child allowances), landlords (no SDC on rent), 60-day rule users (one condition fewer).

Losers: companies (corporation tax 12.5% → 15%).

Non-doms: still 0% SDC, and now able to extend beyond 17 years for €250,000 per five years.

The Cyprus tax reform 2026 at a glance

Cyprus's Parliament approved the reform on 22 December 2025 and it applied from 1 January 2026. It does three things: it lowers personal income tax for most people, it lifts corporation tax to meet the OECD's 15% global minimum, and it tidies up rules that expats found confusing, such as deemed dividends and stamp duty.

Change	Before	From 2026
Tax-free income band	€19,500	€22,000
Top rate (35%) starts at	€60,001	€72,001
Corporation tax	12.5%	15%
SDC on dividends (domiciled)	17%	5% on 2026+ profits
SDC on rent	2.25% effective	Abolished
Deemed dividend distribution	Yes	Abolished for 2026+ profits
Stamp duty	Most contracts	Abolished for most documents
Foreign pension exemption (5% option)	€3,420	€5,000
Crypto gains	No specific rate	8% flat
60-day rule	5 conditions	4 conditions

Figures are from PwC's Cyprus tax summaries (reviewed August 2026) and KPMG Cyprus's April 2026 guide. The Tax Department's own residency web page hasn't been updated yet, so expect to see old figures quoted around the internet for a while.

The Cyprus tax reform 2026 in euros: six examples

Change in the yearly bill for one person, 2026 rules against 2025 rules. Income tax figures are before social insurance and other deductions.

Who	2025	2026	Change
Employee on €50,000	€7,885 income tax	€6,900	€985 less
Employee on €80,000	€17,885	€16,300	€1,585 less
Retiree, €30,000 UK pension on the 5% option	€1,329	€1,250	€79 less
Landlord, €12,000 Cyprus rent	€270 SDC on rent	€0	€270 less
Cyprus-domiciled shareholder, €50,000 dividend from 2026 profits	€8,500 SDC (17%)	€2,500 (5%)	€6,000 less
Company with €100,000 profit	€12,500 corporation tax	€15,000	€2,500 more

Non-doms paid 0% SDC before and after the reform, so the dividend row only applies to Cyprus-domiciled residents. GESY at 2.65% is unchanged and not included.

Evening walk on the seafront a short walk from the Universal area of Paphos — An evening walk along the seafront near Paphos

1. Income tax bands: more take-home pay

Every band moved up. The first €22,000 is now tax-free, and the 35% rate only starts above €72,000.

Rate	2026 band	2025 band
0%	€0 – €22,000	€0 – €19,500
20%	€22,001 – €32,000	€19,501 – €28,000
25%	€32,001 – €42,000	€28,001 – €36,300
30%	€42,001 – €72,000	€36,301 – €60,000
35%	Over €72,000	Over €60,000

Example: on a €50,000 salary, income tax (before social insurance and other deductions) falls from €7,885 in 2025 to €6,900 in 2026, a saving of €985. At €80,000 the saving is €1,585.

The reform also added family allowances (€1,000 for a first child, €1,250 for a second, €1,500 for each further child, within household income limits), up to €2,000 a year for rent or mortgage interest on your main home, and up to €1,000 for green upgrades to your home or an electric car.

2. The 60-day rule got simpler

The 60-day rule used to have five conditions. The fifth, that you weren't tax resident anywhere else, was the one that stopped many people using it. From 1 January 2026 it's gone.

You now need 60 days in Cyprus, no more than 183 days in any other single country, a Cyprus business, job or directorship that lasts to 31 December, and a Cyprus home.

The catch: dropping the condition means you can now be resident in Cyprus and the UK at once. The UK–Cyprus treaty tie-breaker then decides, and HMRC's Statutory Residence Test still applies. It's not a way to leave the UK without leaving.

Good to know

The Tax Department's forms lag behind

The Tax Department's residency page (last updated 2021) and form TD126 (2022 edition) still show the old fifth condition. PwC, KPMG and Cyprus law firms all confirm it was removed. Ask your advisor how the Tax Department is handling TD126 declarations in 2026.

3. Dividends: 5% SDC for domiciled residents, still 0% for non-doms

Special Defence Contribution on dividends fell from 17% to 5% for Cyprus-domiciled residents, but only on profits earned from 2026. Dividends paid out of 2025 and earlier profits still carry 17%, which Cyprus law firms say applies to distributions up to the end of 2031.

For non-doms, which covers almost every British mover, nothing changed: dividends and interest still carry 0% SDC and 2.65% GESY.

Café terrace with wicker chairs and espresso cups on the Kato Paphos seafront — Late morning on a Kato Paphos café terrace

Deemed dividend distribution is gone for 2026 profits onwards. Under the old rule, a Cyprus company owned by domiciled residents was treated as paying out 70% of its profits after two years, with SDC due whether you took the money or not. Profits from 2025 and earlier may still be caught under transitional rules, so check with your accountant before planning dividends from older reserves.

4. Company owners pay 15%

Corporation tax rose from 12.5% to 15% to line up with the OECD's global minimum tax. For a UK consultant moving their business into a Cyprus company, that's €2,500 more on every €100,000 of profit. If you'd rather keep your UK company, first read our post on running a UK company from Cyprus.

Combined with 0% SDC and 2.65% GESY for a non-dom, the total on distributed profit is still about 17.3%. That compares well with the UK, but the gap is narrower than the old "12.5% and nothing" headlines suggest.

The company formation guide covers substance and set-up costs.

Free introduction

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Tell us your pension, salary or dividend mix and your moving date. We'll introduce you to a vetted Cyprus tax advisor who works with UK movers. The introduction is free; the advisor quotes their fee.

Old vs new profits: when to take dividends
5% pension option vs the new bands
First-year residency and UK exit timing

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5. Landlords, pensioners and crypto holders

Rental income: SDC on rent (an effective 2.25%) was abolished for everyone. Rent is still taxed under the income tax bands after a 20% deduction on buildings, plus 2.65% GESY.
Foreign pensions: the amount you can receive before the optional flat 5% applies rose from €3,420 to €5,000. On a €30,000 UK pension that saves about €79 a year. See UK pensions in Cyprus.
Crypto-assets: gains are taxed at a flat 8%, and losses can only be set against crypto gains in the same year.
Stamp duty: abolished for most documents dated from 1 January 2026, including leases. Property transfer fees are separate.

6. Non-dom can now last up to 27 years

Non-dom status still ends when you've been Cyprus tax resident for 17 of the last 20 years. What's new is an option to extend it: a deemed-domiciled person can pay €250,000 for each five-year period, up to two periods, and keep 0% SDC on dividends and interest from anywhere. For what non-dom does and doesn't cover, see our Cyprus non-dom myths.

Family of three generations walking through an orange grove near Paphos in winter sun — Citrus groves near Paphos in January

At €50,000 a year it only makes sense for people with very large dividend or interest income. For a British family arriving in 2026 it's a 2043 problem, but it removes the "cliff edge" that put some long-term planners off.

7. More people must file a tax return

KPMG's April 2026 guide says Cyprus tax residents aged 25 to 70 must file a TD1 return even if they have no income. (Andersen's summary says 25 and over; the difference is at the top end.) The deadline for employees and pensioners is 31 July of the following year. If you've been relying on "I don't earn anything here, so I don't file", that's over.

8. Bigger capital gains exemptions

Cyprus still charges 20% capital gains tax only on Cyprus property and shares in companies that own it. What changed is how much you can gain before paying it. Each figure is a lifetime total per person.

Exemption	Before 2026	From 1 January 2026
Sale of your main home (conditions apply)	€85,430	€150,000
Agricultural land sold by a farmer	€25,629	€50,000
Any other disposal	€17,086	€30,000

The overall cap is €150,000. The pre-2026 amounts were set in Cyprus pounds, which is why they look so odd. Example: you bought a Peyia villa for €300,000, lived in it as your main home and sell it for €420,000. Before 2026, €34,570 of the €120,000 gain would have been taxable (about €6,914). Under the new exemption the whole gain is covered. Our property buying guide covers the costs on the way in.

What didn't change

The 183-day rule and the day-counting rules.
Non-dom: still based on domicile of origin, still 17 of 20 years.
GESY rates: 2.65%, 4.00% self-employed, €180,000 cap.
The 50% and 20% employment income exemptions for new arrivals. A newer 25% "Minds in Cyprus" exemption (capped at €25,000 a year) covers graduates who start a Cyprus job between 2025 and 2030.
No inheritance, gift or wealth tax.
The capital gains tax rate: 20% on Cyprus property only (the exemptions went up, see above).

For the full current picture, start at the tax residency hub or the tax FAQ. More updates for new arrivals are in our resources section.

Walkers between high limestone walls in the Avakas Gorge in spring — Walkers in the Avakas Gorge on the Akamas peninsula

Cyprus tax reform 2026 FAQs

The tax-free band rose to €22,000 with wider bands, corporation tax rose to 15%, SDC on new dividends fell to 5% for domiciled residents, rental SDC, deemed dividends and most stamp duty were abolished, and the 60-day rule lost one condition.

What does it mean for you?

See how the 2026 rules apply to your move

Answer a few questions and we'll point you to the right residency rule, or introduce you to a vetted Cyprus tax advisor.

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The Paphos Brief: tax and residency changes, once a week

We'll tell you when the Tax Department updates its forms or HMRC changes the rules for leavers. No hard sell.

Still have a question?

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If this post didn’t answer your question, ask it here. I read every one myself and reply by email, usually within a working day.

Sources checked for this page

1.PwC Worldwide Tax Summaries — Cyprus taxes on personal income, 2026 and 2025 bandsProfessional
2.PwC Worldwide Tax Summaries — Cyprus income determination (pensions, SDC, exemptions)Professional
3.PwC Worldwide Tax Summaries — Cyprus individual residence (reviewed 4 Aug 2026)Professional
4.PwC Worldwide Tax Summaries — Cyprus other taxes (social insurance, GHS, CGT)Professional
5.KPMG Cyprus — Tax Residency and Non-Dom Rules (April 2026)Professional
6.Andersen Cyprus via International Tax Review — Cyprus tax reform effective 1 January 2026Professional
7.Cyprus Tax Department — Individuals (tax residency)Government
8.Cyprus Tax Department — Form TD126 (60-day rule residence certificate declaration)Government
9.GESY (Health Insurance Organisation) — Financing: contribution rates and co-paymentsGovernment
10.Zeno Legal — Cyprus stamp duty abolition under Law 239(I)/2025Professional
11.Experts for Expats — Cyprus tax for expats (pre-2026 capital gains exemption amounts)Professional

Written by

Jason

Founder, Paphos Advisor

British founder who moved his family from the UK to Paphos in 2025. I write down what I learned doing it properly — the tax, the residency and the living-here detail — and introduce people to the specialists I’d use myself.

How I research and fact-check

Cyprus Tax Reform 2026: What Changed for Expats, and What Didn't

The Cyprus tax reform 2026 at a glance

The Cyprus tax reform 2026 in euros: six examples

1. Income tax bands: more take-home pay

2. The 60-day rule got simpler

3. Dividends: 5% SDC for domiciled residents, still 0% for non-doms

4. Company owners pay 15%

Want the 2026 numbers run on your own income?

5. Landlords, pensioners and crypto holders

6. Non-dom can now last up to 27 years

7. More people must file a tax return

8. Bigger capital gains exemptions

What didn't change

Cyprus tax reform 2026 FAQs

What are the new tax rules for Cyprus in 2026?

When did the Cyprus tax reform take effect?

Did non-dom change in 2026?

Is Cyprus still attractive for UK expats after the reform?

Did capital gains tax change in Cyprus in 2026?

Did the Cyprus tax reform change the 50% exemption for new employees?

Ask Jason about this

Sources checked for this page

Keep reading

The Cyprus tax reform 2026 at a glance

The Cyprus tax reform 2026 in euros: six examples

1. Income tax bands: more take-home pay

2. The 60-day rule got simpler

3. Dividends: 5% SDC for domiciled residents, still 0% for non-doms

4. Company owners pay 15%

Want the 2026 numbers run on your own income?

5. Landlords, pensioners and crypto holders

6. Non-dom can now last up to 27 years

7. More people must file a tax return

8. Bigger capital gains exemptions

What didn't change

Cyprus tax reform 2026 FAQs

What are the new tax rules for Cyprus in 2026?

When did the Cyprus tax reform take effect?

Did non-dom change in 2026?

Is Cyprus still attractive for UK expats after the reform?

Did capital gains tax change in Cyprus in 2026?

Did the Cyprus tax reform change the 50% exemption for new employees?