Cyprus: the 2026 tax reform raises corporate income tax to 15%
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The short answer
Since 1 January 2026, Cyprus taxes companies at 15 % against 12.5 % until 2025. Qualifying dividends remain exempt and a withholding of 5 % targets dividends paid to low-tax jurisdictions.
The essentials
The Cypriot tax reform, passed on 22 December 2025, came into force on 1 January 2026. The corporate income tax rate rises from 12.5 %verified on 12/10/2026 to 15 %verified on 12/10/2026. The old rate applies only to financial years up to 2025. Qualifying dividends, including from foreign subsidiaries, remain exempt.
The other measures
- The special defence contribution on dividends paid to a domiciled resident is reduced to 5 %verified on 12/10/2026 for profits made from 2026; non-domiciled persons remain exempt.
- A withholding of 5 %verified on 12/10/2026 applies to dividends paid to entities in low-tax jurisdictions.
Why it is useful for comparison
Cyprus was often cited as a low-rate European alternative. With 15 %verified on 12/10/2026, it moves closer to the average, and the general Andorran rate of 10 %verified on 09/10/2026 becomes lower. See holding company in Cyprus and the comparison of nine countries.
To compare with Andorra
| Subject | Cyprus in 2026 | Andorra |
|---|---|---|
| Corporate income tax rate | 15 %verified on 12/10/2026 | 10 %verified on 09/10/2026 |
| Dividends from shareholdings | Exempt under conditions | Exempt if 5 %verified on 12/10/2026 held for 12 monthsverified on 12/10/2026 and the subsidiary is sufficiently taxed |
| Withholding on dividends to low-tax jurisdictions | 5 %verified on 12/10/2026 | Capital income of Andorran source exempt from IRNR for a non-resident |
Cyprus has raised its rate and tightened outbound payments; the gap in Andorra's favour has therefore widened. This changes nothing for a French tax resident, whose dividends remain taxable in France: see holding company and the French tax authorities.
What to check
The detailed measures (research and development, deemed dividends) are the subject of diverging sources: we do not reproduce them. See the Cyprus page for the full framework.
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Frequently asked questions
What is the corporate income tax rate in Cyprus since 2026?
15 %, against 12.5 % until 2025.
Do dividends received remain exempt?
Yes, qualifying dividends, including from foreign subsidiaries, remain exempt under conditions.
Going further
Official sources
This information is general and is not personalised legal, tax or financial advice. It is verified as of the date shown and may change.