The tax reform was passed by parliament on 22 December 2025 and applies from 1 January 2026. The tax-free allowance rose from €19,500 to €22,000, every rate band moved up, and new family deductions were introduced.
2026 rates
| Taxable income | Rate |
|---|---|
| 0 – €22 000 | 0% |
| €22 001 – €32 000 | 20% |
| €32 001 – €42 000 | 25% |
| €42 001 – €72 000 | 30% |
| over €72,000 | 35% |
New deductions from 2026
- For children: €1,000 for the first, €1,250 for the second, €1,500 for the third and each subsequent child, including students up to 24.
- Mortgage interest or rent on a main home: up to €2,000 a year.
- Energy-efficiency works or buying an electric car: up to €1,000.
- Insurance premiums — the deduction now also covers permanent and partial disability cover.
The deductions apply where household income is below the threshold: €90,000 with no children, €100,000 with one or two, €150,000 with three or four, €200,000 with five or more.
The 50% relief for new residents
- Conditions: first employment in Cyprus, annual remuneration above €55,000, and you must not have been a Cypriot tax resident for 15 consecutive years before starting the job.
- Half of the employment income is exempt. It lasts 17 years from the year employment begins.
- The relief applies to employment income paid through a Cypriot payroll, including a director’s salary from their own company. It does not apply to sole trader income or consulting fees under a services contract.
- Changing employer within the 17 years is allowed provided the conditions still hold.
- It combines very well with non-dom status — both reliefs run for 17 years.
The 20% relief
For those earning under €55,000: the lower of 20% of income or €8,550 a year is exempt, for 7 years. Conditions: first employment in Cyprus and 3 preceding years of work abroad for a non-resident employer. The two reliefs can't be combined; you choose one.
Other rates
- Crypto assets: a flat 8% on gains from sales, with losses offset in the same year.
- Employee share options under approved schemes: 8%, capped at two annual salaries and €1 million over 10 years.
- Foreign pensions: a 5% rate on amounts above a certain threshold — the details of the reform are not officially confirmed.