Cyprus’s 2026 tax reform introduced important changes for companies operating in the jurisdiction whilst also maintaining several core features of the Cyprus tax system.
For many businesses, the real issue is not the corporate rate alone, but whether the structure still works properly in practice. Substance, management and control, banking arrangements, residency, and the way the business is run remain critical points of review.
Companies should now consider the following:
1. Corporate Tax Position
The corporate income tax rate has increased from 12.5% to 15% for profits arising from 2026 onwards. Businesses should update forecasts, accounting treatment and tax estimates accordingly. For a broader overview of the reform’s impact, see our article on Cyprus tax reform 2026.
2. Tax Losses
The period for carrying forward tax losses has been extended. Companies should review historic losses to see whether any unused amounts may still be available for relief. This should be considered together with the wider changes explained in our article on group planning, holding and IP structures.
3. Dividend and Shareholder Arrangements
The reform changed the treatment of certain shareholder-related matters. Companies should review dividend policies, shareholder loans and any private use of company funds or assets to ensure they remain appropriately structured. Further background can be found in our article on interest, rental income and disguised dividends.
4. Contracts and Transactions
The abolition of stamp duty on most documents may affect the timing and execution of commercial agreements. Businesses with pending transactions should consider whether documents can be completed under the new rules. Where relevant, our article on real estate investments provides additional context.
5. Group and Holding Structures
Groups with Cyprus entities should review their structure, particularly where there are cross-border financing arrangements, intellectual property, or intercompany transactions. In many cases, the key question is whether the company has sufficient substance and a proper management framework. Our article on group planning, holding and IP structures discusses these issues in more detail.
The 2026 reform is therefore not just about a higher corporate tax rate. For the right structure, Cyprus may still offer important advantages, but those advantages need to be assessed carefully in light of the company’s facts and business model.
For a review of your tax position and corporate structure, contact our team.
📞 Call us: 00357 22 622 262
📧 Email us: info@paraschou.com.cy
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This article is provided for general information purposes only and does not constitute legal, tax, or other professional advice. It should not be relied upon as a substitute for specific advice on any individual matter or transaction. Professional advice should be obtained before acting or refraining from acting on the basis of any information contained herein.
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