On 22 December 2025, the House of Representatives of Cyprus approved a comprehensive tax reform package, marking the most significant overhaul of the country’s tax system in over two decades. The reform is scheduled to enter into force on 1 January 2026.

The reform aims to modernise the tax framework, enhance fairness, align Cyprus with international tax standards, and provide targeted relief to households while maintaining the country’s competitiveness as a business and investment hub.

Key measures include:

• Personal income tax:

The tax-free threshold is increased from €19,500 to €22,000, offering relief to middle-income earners and families.

• Family-related deductions:

Expanded tax allowances for dependants and certain household expenses, improving disposable income for families.

• Corporate income tax:

The corporate tax rate rises from 12.5% to 15%, bringing Cyprus in line with global minimum taxation standards.

• Dividends and deemed distribution:

The long-criticised deemed dividend distribution regime is abolished, while the Special Defence Contribution on actual dividends is reduced to 5%.

• Stamp duty and transaction taxes:

Most stamp duties are abolished, simplifying transactions and reducing administrative burdens.

• Tax administration:

Enhanced enforcement powers and reporting obligations are introduced to improve compliance and transparency.

The Minister of Finance described the reform as a step towards a fairer, more efficient and growth-oriented tax system, balancing social support with fiscal sustainability. Business groups have largely welcomed the changes, noting increased clarity and alignment with international norms.

The reform is expected to affect individuals, companies, investors and service providers, with further guidance anticipated ahead of its implementation in 2026.

Парламент Кипра одобрил масштабную налоговую реформу

В понедельник, 22 декабря 2025 г., Палата представителей Республики Кипр приняла пакет законов о глубокой налоговой реформе — крупнейший пересмотр налоговой системы страны за последние 23 года. Реформа была одобрена большинством голосов парламентариев и вступит в силу с 1 января 2026 г.

Главные изменения направлены на сбалансирование налоговой нагрузки, повышение справедливости в системе и улучшение поддержки семей, домохозяйств и предпринимателей.

Основные положения реформы:

• Подоходный налог: необлагаемый минимум повышен с €19 500 до €22 000. Это должно дать налоговые льготы более широкому кругу граждан и увеличить доступный доход для семей среднего класса.
• Льготы семьям: расширены налоговые вычеты на детей и другие расходы (например, жильё и обучение).
• Корпоративный налог: базовая ставка увеличивается с 12,5 % до 15 %, что приведёт Кипр в соответствие с международными стандартами налогообложения корпораций.
• Дивиденды и взносы: отменено налогообложение «предполагаемого распределения дивидендов», а ставка сбора на фактические дивиденды снижается до 5 %.
• Налог на операции: отменены почти все гербовые сборы; вводятся современные правила налогообложения процентов, дивидендов и доходов нерезидентов.
• Администрирование налогов: расширяются полномочия налоговых органов, усиливается отчётность и контроль за уплатой налогов.

Министр финансов Макис Керавнос назвал реформу шагом к более справедливой, понятной и конкурентоспособной системе, которая поддержит граждан, укрепит экономический рост и повысит привлекательность Кипра для инвестиций.

Решение получило поддержку деловых кругов и работодателей, которые отмечают, что изменения создают основу для устойчивого развития экономики.

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Speaking at a meeting of the Finance Committee, Keravnos stated that the goal of the reform is to maintain the stability of the economy and ensure a budget surplus next year.

“Tax reform is not a tool of social policy, however, it includes provisions related to family income, education, housing programs, and the transition to a ‘green economy,’” the minister noted.

What will change from January 1, 2026

It should be reminded that the tax reform will come into force in 2026 and will be the most extensive in recent decades (see our detailed report).

• New tax brackets will be introduced: income up to €20,500 will be tax-exempt; higher income will be taxed at rates of 20%, 25%, 30%, and 35%.
• Corporate tax will increase to 15%.
• For the first time, taxation of cryptocurrency assets will be introduced.
• Penalties for violations will rise to 300%, and the tax service will be able to freeze bank accounts and assets.
• The defence contribution will be abolished, and the dividend tax will be reduced to 5%.
• Tax benefits will be introduced for families, students, homeowners, and investments in energy efficiency.

According to the government, these measures aim to modernize the tax system, making it fairer and more resilient to economic risks.

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Significance for Businesses in Cyprus

The removal of this financial obligation, previously mandatory for all registered companies in Cyprus, is anticipated to have a positive impact on both domestic and foreign businesses. It aligns with Cyprus’s commitment to cultivating a more welcoming business environment by lowering overhead costs and fostering growth and innovation. The government’s proactive stance in eliminating the annual levy underscores its dedication to fortifying Cyprus as a prime business location, characterized by an advantageous tax system and strategic geographical positioning.

Economic Implications and Future Prospects

This policy shift is poised to attract new investments and ventures, solidifying Cyprus’s reputation as an appealing hub for international businesses. It reflects a broader initiative to stimulate economic growth and attract crucial foreign direct investment, essential for the country’s economic vitality.

Conclusion

The abolishment of the annual company levy in 2024 represents a pivotal advancement in Cyprus’s ongoing endeavors to support its business sector and establish itself as a competitive destination for international companies. This strategic move not only benefits existing businesses but also positions Cyprus as an increasingly alluring location for global investment.

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One of the key attractions is Cyprus’ advantageous tax system. The corporate tax rate in Cyprus is one of the lowest in the European Union at 12.5%. This competitive rate, coupled with an extensive network of double taxation treaties, ensures that businesses operating in Cyprus can benefit from reduced tax liabilities and increased profitability.

Furthermore, Cyprus offers a robust legal framework and a business-friendly regulatory environment. The country has implemented numerous reforms to simplify company registration procedures, making it swift and efficient for entrepreneurs to set up their businesses. The transparent legal system in Cyprus provides a secure foundation for business operations, instilling confidence in investors and stakeholders.

Strategic geographical location is another compelling factor. Positioned at the crossroads of Europe, Asia, and Africa, Cyprus serves as a gateway for businesses looking to tap into diverse markets. This strategic location facilitates international trade and enables companies to establish a global presence with ease.

Cyprus also boasts a highly skilled and multilingual workforce. The availability of well-educated professionals proficient in English further enhances the country’s appeal for businesses looking to operate on an international scale. This ensures that companies in Cyprus can access a talented pool of human resources to drive innovation and growth.

In addition, Cyprus has a well-developed banking sector with a solid infrastructure for financial services. This enables businesses to easily manage their financial transactions, investments, and capital flows.

Incorporating a company in Cyprus is a strategic move that combines a favorable tax environment, a supportive legal framework, a strategic geographical location, a skilled workforce, and a robust financial sector. Entrepreneurs seeking a competitive edge and international expansion opportunities would do well to consider Cyprus as the ideal destination for their business ventures.

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Phase A: November 14, 2023 – December 31, 2023

During this initial phase, extending for approximately six weeks, entities established under Companies Law (Chapter 113), European Public Limited Liability Companies, and partnerships, along with their officers/partners, are required to update or re-register their BO information. This holds true even for those who had previously completed the interim solution system (ISS). The “Information from the Interim System” tab will facilitate re-registration by providing access to the most recent BO information from the ISS.

Importantly, no financial burden will be imposed during Phase A, and the method of accessing the final version system remains unchanged from the ISS. Only specific functionalities outlined in Directive R.A.D. 112/2021, as amended (Registrar’s Directive), will be available during Phase A through Phase C.

Entities that complied or intended to comply with the ISS must continue doing so in the final version. This applies to both entities declaring exemption and those listed on regulated markets subject to EU legislation or equivalent international standards ensuring transparency of ownership information.

Phase B: January 1, 2024 – February 29, 2024

Entities failing to register during Phase A will incur a financial burden starting January 1, 2024, until compliance with the registration requirement. Upon settling this obligation, entities can proceed with subsequent actions without additional costs, as specified in the Registrar’s Directive.

Phase C: March 1, 2024, Onwards

Starting March 1, 2024, all actions outlined in the Registrar’s Directive will be available under Phase C. This encompasses updating the BO Register, confirming beneficial owners, electronic searches, requests for exemption from disclosure, and more.

For comprehensive details, user guidance, and legislative information, visit the Beneficial Ownership Register section . Any inquiries can be submitted in writing to Ubos@meci.gov.cy.

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In a surprising and significant move, Russia has recently suspended its double tax treaties with a group of nations it has classified as “unfriendly.” This decision has sent ripples through the international community, raising questions about the potential consequences for global business, international relations, and the broader economic landscape. In this article, we delve into the implications of Russia’s suspension of these treaties and explore the possible ramifications for businesses and diplomatic ties.

Understanding Double Tax Treaties

Double tax treaties (DTTs) are bilateral agreements between two countries aimed at mitigating the double taxation of income and assets. These treaties ensure that individuals and businesses are not taxed twice on the same income or capital in two different jurisdictions, thus promoting cross-border trade, investment, and economic cooperation. Russia has entered into such treaties with numerous countries over the years to foster international trade and investment.

Russia’s Decision to Suspend DTTs

In a move that has surprised many, Russia announced the suspension of double tax treaties with a group of nations it has identified as “unfriendly.” While the list of countries affected by this decision has not been officially released at the time of writing, this development highlights a clear shift in Russia’s foreign policy and its approach to international economic relations.

Possible Implications

1. Business Uncertainty: The sudden suspension of double tax treaties can create uncertainty for businesses operating across borders. Companies that have structured their operations based on these treaties may face challenges in managing their tax liabilities, potentially leading to increased costs and operational complexities.
2. Investment Impact: The suspension of DTTs could impact foreign investment decisions. Investors might rethink their strategies and allocations in light of potential changes to taxation frameworks, potentially affecting the attractiveness of Russia as an investment destination.
3. Diplomatic Relations: The decision to classify certain countries as “unfriendly” and suspend tax treaties could strain diplomatic relations between Russia and the affected nations. Diplomatic tensions could have broader repercussions, affecting not only economic ties but also political cooperation and regional stability.
4. Global Business Landscape: The suspension of DTTs raises questions about the broader implications for international taxation and the evolving global business landscape. Other nations might reevaluate their own tax treaties and strategies, potentially leading to a reshaping of international tax norms.

Navigating the Changes

Businesses and individuals impacted by Russia’s decision will need to carefully assess their tax planning strategies and consider the potential impact on their operations. Seeking guidance from tax experts and legal advisors with an in-depth understanding of international taxation and treaty implications will be crucial.

Conclusion

Russia’s suspension of double tax treaties with “unfriendly” nations marks a significant development in the realm of international business and diplomacy. The decision holds the potential to reshape cross-border trade and investment dynamics, as well as influence the broader global economic landscape. As businesses and governments adapt to this change, the full extent of the implications will become clearer, underscoring the need for agile strategies and informed decision-making in an evolving international context.

The above is for informative purposes only. Further professional advice should be sought for each particular case. Our firm does not accept any responsibility for any loss or damage occurring by acting on the basis of this information.

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We are pleased to present the latest developments in the continuously evolving realm of European corporate law. This article illuminates the substantial impact of the European Union’s (EU) Directive (EU) 2019/2121, commonly known as the Mobility Directive, which introduces crucial revisions to Directive (EU) 2017/1132, encompassing cross-border conversions, mergers, and divisions.

The Mobility Directive: Catalyzing Corporate Restructuring

Initiated by the EU, the Mobility Directive has set forth a sequence of transformative modifications aimed at facilitating seamless cross-border mobility for corporations. This directive is strategically designed to amplify the efficiency and adaptability of corporate restructuring processes, including conversions, mergers, and divisions, within the EU’s internal market.

Transposition Deadline and Cyprus’s Trajectory

Scheduled for transposition by EU Member States before January 31, 2023, the Mobility Directive is poised to redefine corporate legislation across the European landscape. Cyprus, among other Member States, is currently in the process of assimilating these alterations into its domestic legislation. Despite the initial deadline having lapsed, Cyprus is steadfast in its commitment to implement the Mobility Directive’s provisions by the conclusion of 2023.

While Cyprus, alongside its fellow Member States, undertakes the transposition of the Mobility Directive into national law, enterprises should anticipate shifts in the execution of cross-border corporate restructuring. As Cyprus aligns its legal framework with the directive’s stipulations, enterprises will have the opportunity to harness the augmented flexibility and efficiency offered by this directive.

Key Tenets of the Mobility Directive

The directive orchestrates several pivotal changes that fundamentally redefine operational paradigms:

Unified Framework: Introducing a harmonized legal infrastructure for cross-border divisions and conversions.

Amendment of Merger Norms: Overhauling the extant regulations governing cross-border mergers.

Transparency and Public Disclosure: Ensuring public disclosure and transparency, enabling well-informed decision-making.

Fortified Safeguards: Strengthening protections for members, employees, and creditors, with their interests taking precedence.

Adaptation to the Digital Era: Incorporating provisions to facilitate electronic submissions, streamlining processes in the digital epoch.

Anti-Abuse Measures: Instituting novel anti-abuse regulations to enable rigorous scrutiny by competent authorities, deterring potential misuse.

Cross-Border Operations

The directive caters comprehensively to diverse cross-border undertakings, notably encompassing:

Cross-Border Conversions: Companies can alter their registered legal structure and office locale without dissolution, while upholding their distinct identity.

Cross-Border Divisions: Encompassing comprehensive divisions, partial divisions, and divisions by separation, all aimed at optimizing resource allocation.

Cross-Border Mergers: Expanding the scope of ‘mergers’ to encompass the transfer of assets and liabilities to an existing company, under specific conditions.

Transparency and Disclosure

The Mobility Directive heralds an era of heightened transparency. Documentation of cross-border operations gains transparency as they are divulged and made accessible in the respective Member State’s register. This shift bolsters transparency and equitability in transactions while safeguarding stakeholder rights.

Reinforced Protections for Members, Employees, and Creditors

To ensure the safeguarding of diverse interests:

Members’ Entitlements: Elaborated reports and compensation mechanisms are instituted to secure the rights of all members, including dissenting parties.

Employee Involvement: Enriched information, consultation, and participation rights for employees are firmly established.

Creditor Safeguards: Creditor rights receive reinforcement through an opposition mechanism against inadequate safeguards.

Scrutiny and Legitimacy

The Mobility Directive introduces rigorous scrutiny of operations’ legitimacy. Competent authorities meticulously assess cross-border operations for indications of abuse, fraudulence, or criminal intent, ensuring impartiality and legality.

Embracing the Digital Epoch

In acknowledgment of technological advancement, the directive actively promotes digitalization by endorsing electronic submissions. Documents and pre-operation certificates are accessible through interconnected registries, cultivating efficiency and transparency.

Conclusion

The Mobility Directive stands as a pivotal milestone, fostering seamless corporate mobility and establishment within EU Member States. By harmonizing regulations, the directive eradicates uncertainties stemming from disparate procedures across distinct nations. As we forge ahead, the EU’s business panorama is poised to evolve into an intricately connected and dynamic landscape.

Stay Informed and Prepared

To stay abreast of Cyprus’s strides in implementing the Mobility Directive and to effectively navigate the evolving corporate terrain, we recommend engaging with one of our experts. Staying informed and proactive will be instrumental in harnessing the opportunities unveiled by this transformative directive.

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Following the above-mentioned Judgement of the CJEE, Article 1, point 15(c) of Directive (EU) 2018/843 of the European Parliament and the Council, as of 30th May 2018, which provides for access to the information on the beneficial ownership of legal entities to any member of the general public, is now invalid as it constitutes a serious interference with the fundamental rights for private life and to the protection of personal data, enshrined in Articles 7 and 8 of the Charter of Fundamental Rights of the European Union.

The relevant information will still be provided to the obliged entities, with the applicable procedure by submitting a declaration confirming that the information on the Beneficial Owners is requested within the context of performing customer due diligence.

Please note, that the obligation of companies and partnerships to submit and update their Beneficial Owners information is not affected and remains valid.

Source: Department of Registrar of Companies and Official Receiver

The above is for informative purposes only. Further professional advice should be sought for each particular case. Our firm does not accept any responsibility for any loss or damage occurring by acting on the basis of this information.

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The above is for informative purposes only. Further professional advice should be sought for each particular case. Our firm does not accept any responsibility for any loss or damage occurring by acting on the basis of this information.

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