The Ultimate EU Holding
Navigate the 15% Cyprus Corporate Tax Era with the EU’s most robust exemption framework. Fully synchronized with the December 22, 2025, legislative updates.
Following the landmark December 2025 vote, Cyprus has aligned with OECD Pillar Two standards by adopting a 15% headline rate, while crucially maintaining its core exemptions that attract holding, trading, and tech companies.
| Tax Component | 2025 Rate | 2026 Voted Rate |
| Standard CIT Rate | 12.5% | 15.0% |
| Dividend Income (Incoming) | 0% | 0% (Exempt) |
| Profit from Sale of Shares | 0% | 0% (Exempt) |
| Notional Interest Deduction | Up to 80% | Up to 80% (Preserved) |
| Annual Government Levy | €350 | €0 (Abolished) |
Most business owners see a tax increase from 12.5% to 15% and think only of the cost. In reality, this is a strategic upgrade for international business.
By aligning with OECD global minimum tax standards, Cyprus has removed the “tax haven” target from its back. For founders relocating from high-tax corridors like Belgium, France, or the Netherlands, this provides massive defensive value. It makes it nearly impossible for home-country tax authorities to argue that your Cyprus company is a “sham” structure.
You aren’t hiding in a loophole; you are operating in a premium, fully compliant white-listed EU jurisdiction that still beats your home country’s 25%+ rate by a landslide.
Even with the headline rate moving to 15%, the total tax “leakage” in Cyprus is significantly lower than in traditional hubs like Ireland or Luxembourg because the system is built on powerful base exemptions.
If your company operates as a holding entity or manages investments, your actual tax burden on those activities remains effectively zero.
The 15% rate is often just a ceiling. For active trading and tech companies, Cyprus offers two primary legal mechanisms to reduce the taxable base by up to 80%, resulting in an effective tax rate as low as 3.0% (20% of the 15% headline rate).
NID rewards companies that are financed by equity rather than debt. It allows companies to claim a “theoretical” interest expense on new equity injected into the business.
This deduction can reduce your taxable profit by up to 80%. It is a powerful tool for companies that retain profits or introduce significant capital.
If your Cyprus company develops qualifying intellectual property—such as software, patents, or copyrighted code—the IP Box regime is unmatched in the EU.
80% of the qualifying profits generated from this IP are exempt from tax. Under the 2026 rates, this translates to an effective tax rate of 3.0% for tech founders, ensuring Cyprus remains Europe’s premier hub for intellectual property development.
The corporate tax rate in Cyprus is 15% as of 2026. This rate applies to all tax-resident companies on their worldwide income.
Yes, this refers to the Effective Tax Rate. By applying the 80% deduction from the IP Box or NID, you only pay the headline tax rate on 20% of your profit. Currently, 20% of 12.5% equals 2.5%. In 2026, this will become 3%.
Dividends received by a Cyprus company from another resident company are exempt. Dividends from abroad are also exempt provided the paying company is not involved in more than 50% passive activities or its foreign tax burden is not significantly lower than the Cyprus rate.
No. Cyprus is a white-listed, compliant EU jurisdiction and follows all OECD and EU anti-avoidance directives. Its reputation as a stable, transparent financial hub is exactly why banks and international partners trust Cyprus-based structures over traditional offshore islands.
For most SMEs, the headline increase to 15% is offset by the abolition of Deemed Dividend Distribution and the reduction of SDC on actual dividends to 5%. This simplifies accounting and significantly improves cash flow for business owners living in Cyprus.
Yes, the statutory rate is 15% for all Cyprus tax-resident companies from January 1, 2026. However, through deductions like NID, many companies maintain an effective rate far lower.
Pillar Two primarily affects large multinational groups with global revenues exceeding €750m. For SMEs and private holdings, the main impact is the shift to the 15% rate, but the core exemptions remain unchanged.
No. Corporate tax is calculated on net taxable profit from the first Euro. However, the abolition of the €350 annual levy makes maintaining small or dormant companies more cost-effective.
Secure your business in the 2026 tax era. Don’t wait for a Tax Department notice. Optimize your corporate structure today.
