Tax planning in Cyprus: what is actually available in 2026

Cyprus changed its tax law substantially on 1 January 2026. Most of what is written online about Cyprus tax planning predates that, and some of it is now simply wrong. This is what stands today.

What changed in 2026

	Before	From 1 Jan 2026
Corporate tax	12.5%	15%
SDC on dividends	17%	5%
Deemed dividend distribution	applied	abolished on profits from 2026
Tax-free personal allowance	€19,500	€22,000

The headline reads as an increase, and for a trading company it is. For an owner taking profits out, the dividend change pulls hard in the other direction.

The reliefs that survived

Non-domicile status — no Special Defence Contribution on dividends or interest, for 17 years. This is the big one for company owners, and it is unchanged. Full article.

The IP Box — 80% of qualifying IP profit deducted, an effective rate of about 3% now that corporate tax is 15%. Full article.

Notional interest deduction — a deduction on new equity introduced into a company, capped at 80% of taxable profit from the relevant activity. It rewards funding a company with equity rather than debt.

The employment exemptions — 50% of employment income exempt above the salary threshold for qualifying new residents, or 20% capped at €8,550 for others. These are the reliefs the IR59 / TD59 exists to claim.

The residency rules, and the change that matters

You are Cyprus tax resident under either of two tests:

• 183 days in Cyprus in the calendar year, or
• The 60-day rule — 60 days here, with a home available to you, and either employment, a business or a directorship in Cyprus

The 60-day rule got easier in 2026. The old fifth condition — that you must not be tax resident anywhere else — was removed. From 1 January 2026 you can qualify even if another country also treats you as resident.

That is a genuine opening for people who split their year. It is also a trap if you read it carelessly: being resident in two places at once means a double tax treaty decides which one wins, and that is a question worth asking before you rearrange your life around the 60 days.

How the pieces fit together

The reliefs are designed to stack, and that is where the real planning is:

1. The company earns. If the income is IP-derived, the IP Box takes the effective rate to about 3%
2. The owner takes a salary, against which the employment exemption and the IR59 allowances apply
3. The remainder comes out as dividends, and non-dom status removes the defence contribution on them
4. Residency determines whether any of it applies at all

Optimising one step in isolation usually costs more than it saves. A salary set purely for tax reasons can break a residence permit; dividends taken before non-dom is registered attract a tax that need not have been paid.

What planning is, and what it is not

Legitimate planning means using reliefs the law deliberately created, and being able to evidence that you qualify for them. Every relief above has conditions, and every one of them can be examined.

What it is not: paperwork that describes a business that is not really happening here. Substance requirements, the nexus rule in the IP Box, the management-and-control test for company residence, and bank compliance all ask the same question from different angles — is this real? If the answer is no, the structure fails at the first serious examination, usually at a bank.

Common mistakes

Planning from pre-2026 figures. Corporate tax is 15%, the allowance is €22,000, dividends are 5% SDC.

Taking dividends before registering non-dom. The status is not automatic.

Assuming the 60-day rule is now unconditional. The home, the employment and the 60 days still apply. Only the fifth condition went.

Structuring for tax before the business exists. The order is business first, structure second.

Doing it once. These are annual positions, not a one-off setup.

What we do

We map your actual position — where you are resident, where the company is managed, where the income comes from — and tell you which of these reliefs you qualify for, which you could qualify for with a change, and which you should stop reading about because they do not fit.

Then we handle the filing side: the non-dom registration, the tax registrations, the IR59, the annual calendar.

This is a paid advisory service, and it works alongside a qualified tax adviser and auditor rather than replacing them. Nothing above is advice on your specific circumstances — it is the framework, current as of the date at the top of this page. Tell us what your year actually looks like and we will tell you honestly what is worth doing.