Corporate tax in Cyprus: rate, deadlines and how it really works

Cyprus charges corporate income tax on a company's taxable profit at 15% for tax years from 2026, up from 12.5%, which still applies to profits of 2025 and earlier. You pay during the year through two provisional installments, and the annual TD4 return settles the difference. The 2026 reform also moved the filing and payment dates, so the deadlines you remember from last year are probably wrong.

What is the corporate tax rate in Cyprus?

The corporate income tax rate is 15% for tax years from 2026, and it applies to every Cyprus tax-resident company at the same rate whatever its size. The reform that raised it introduced no small-company band and no turnover threshold.

Residency itself also changed. A company is Cyprus tax resident if its management and control is exercised in Cyprus, which for an owner-managed company means the directors who actually take the decisions are here. From tax year 2026 there is a second limb: a company incorporated in Cyprus is Cyprus tax resident by default, unless a double tax treaty provides otherwise. Under the old rule a Cyprus-incorporated company escaped default residency by being tax resident somewhere else; that escape route is gone.

Which profits are taxed at 12.5% and which at 15%?

The split runs strictly by tax year. Profits of tax years up to and including 2025 are taxed at 12.5%, profits of 2026 onwards at 15%, and the increase is enacted law, voted on 22 December 2025 and in force from 1 January 2026. Nothing is retroactive.

The split stays live for a while, and it is worth keeping the two computations visibly separate in your books. During 2026 a typical company is settling its 2025 liability at 12.5%, paying provisional tax on 2026 profits at 15%, and possibly distributing profits earned under both regimes, each with its own dividend arithmetic. If your ledger cannot say which profit belongs to which year, every one of those calculations becomes guesswork. The full picture of what else moved is in our guide to the 2026 Cyprus tax reform.

What is corporation tax actually charged on?

On taxable profit, which is the accounting profit adjusted by tax rules. You start from the profit in the financial statements, add back expenses that fail the deduction test, take out income Cyprus exempts, and apply any special regime the company qualifies for. Two companies with identical revenue can pay very different tax because their bases differ.

The deduction test is the one every founder meets first: an expense is deductible when it is incurred wholly and exclusively in the production of income, and it needs a document behind it. The law then names specific casualties. Private saloon car costs are not deductible at all, and entertainment is capped at the lower of 1% of gross income and €30,000 from tax year 2026, up from €17,086 before the reform.

On the income side, dividends a company receives are exempt from income tax, which is why holding structures work the way they do here. And a loss year is not wasted: tax losses now carry forward for seven years from tax year 2026, extended from five.

One myth to clear up, because we hear it weekly: there is no six-month income tax window for expenses incurred before incorporation. Formation costs are capital and not deductible. The six-month figure people quote belongs to VAT, where a newly registered business can recover input VAT on services received up to six months before registration and goods up to three years before.

When is the Cyprus corporate tax return due?

The corporate income tax return, the TD4, is due by 31 January of the second year after the tax year, from tax year 2026, and the final self-assessed tax is payable by the same date. The 2026 return and the 2026 tax are both due by 31 January 2028. The 2025 tax year still runs on the old calendar: the return is due 31 March 2027, and the final 2025 balance is payable earlier, by 1 August 2026.

Filing is electronic. The 2025 return goes through TAXISnet; the Tax Department has announced that income tax returns move to Tax For All with the 2026 return, filed during 2027. Late filing has a price from 2026: a fixed penalty of €250 for a company, or €500 where turnover or assets exceed €1 million, and late-paid tax picks up a 5% charge, another 5% after two months, plus interest at 3.5% for 2026.

How does provisional tax fit around the return?

Provisional tax is the same liability collected early. The company files an estimate of the year's taxable profit by 31 July of the tax year and pays the tax on that estimate in two equal installments, due 31 July and 31 December. The estimate can be revised up or down any time until 31 December. The return then produces the real figure, and the balance is paid or refunded. A company that starts up after 30 June files by 31 December and pays a single installment on that date, a sensible new rule from 2026 for mid-year incorporations.

Say your 2026 profit lands at €100,000, so final tax of €15,000, but you declared an estimate of €60,000 and paid €9,000 provisionally. The estimate is 60% of the result, below the 75% line, so 10% of the €6,000 shortfall is added: €600 you did not need to pay. A December revision would have cost nothing. In a year when the rate itself rose, an estimate rolled forward from 2025 habits is exactly how companies walk into this. The mechanics of revising mid-year are in the provisional tax guide.

What else did the 2026 reform change, and what stayed?

Corporate tax went up while the taxes around distribution came down. SDC on dividends for Cyprus-domiciled shareholders fell from 17% to 5% for profits earned from 2026, though pre-2026 profits distributed through the end of 2031 keep the old 17%. The deemed dividend distribution rules are abolished for 2026 profits onwards, with one last transitional round covering 2024 and 2025 profits. And stamp duty is abolished entirely from 1 January 2026. For an owner-director the combined picture of 15% corporate tax followed by 5% SDC is usually better than the old 12.5% plus 17%, and we run those numbers in salary vs dividends in Cyprus.

Just as useful is what the reform left alone. The IP Box kept its 80% deduction, so with the higher rate the effective rate on fully qualifying IP profit is now 3% from tax year 2026, versus 2.5% before; we unpack the regime in the IP Box explained. The non-dom rules survive, with deemed Cyprus domicile still arising only after 17 of the 20 years preceding the tax year. Audited IFRS financial statements remain the rule for every Cyprus company, though the smallest private companies got more room: a review engagement can replace the audit where net turnover stays within €300,000 and gross assets within €500,000, both over two consecutive years, a turnover limit raised from €200,000 in February 2026.

Who prepares the corporate tax return, and who files it?

For a Cyprus limited company the chain is fixed: the books produce the financial statements, a licensed statutory auditor signs them, and the TD4 is built from the approved figures. The quality of the return is decided months earlier, in the bookkeeping.

That first link is the part Sumly does. The AI reads the documents you drop in or email to your company's private inbox address and books them double-entry, and the read-only bank feeds match transactions against invoices and recorded purchases as they arrive. Year-end then starts from a ledger that is already reconciled rather than from a folder of receipts. The audit or review itself is always performed by an independent auditor; you can order one through our partner auditor in the dashboard, and the auditor can get their own Sumly login to work directly in the books.

The tax work is where the plans differ. On Base you run the books yourself, and Sumly prepares the provisional tax and corporate return work from them for you to submit through Tax For All. On Premium your Sumly certified bookkeeper reviews the books, handles both provisional installments and the annual return, and submits for you. Either way a person reviews and files; nothing goes to the Tax Department on autopilot.

Questions founders ask us

Frequently asked

Which tax years are taxed at the 15% corporate rate?

Tax year 2026 onwards. Profits of tax years up to and including 2025 stay at 12.5%, and nothing about the increase is retroactive. In practice that means during 2026 and 2027 you can be settling a 12.5% year and paying provisional tax on a 15% year at the same time, so keep the two computations apart.

When is the Cyprus corporate tax return due?

The 2025 TD4 is due by 31 March 2027, with the final self-assessed balance for 2025 paid earlier, by 1 August 2026. From tax year 2026 the return and the payment share one date: 31 January of the second year after the tax year. The 2026 return and the 2026 tax are both due by 31 January 2028.

Is provisional tax separate from the corporate tax return?

No, it is the same liability paid early. You estimate the year's taxable profit and pay tax on the estimate in two installments, 31 July and 31 December of the tax year itself. The return later computes the real figure and you pay the balance or reclaim the excess. If the estimate lands below 75% of the final result, a 10% surcharge applies on the difference.

Is there a lower corporate tax rate for small companies?

No. The 15% rate applies to every Cyprus tax-resident company regardless of size, and the 2026 reform introduced no small-company carve-out. What differs between companies is the base the rate is charged on: deductions, exempt income and regimes like the IP Box all shrink taxable profit, and that is where the real planning happens.

Does the 15% global minimum tax apply to my Cyprus company?

Only if you are part of a multinational group with consolidated revenue of €750 million or more. Cyprus enacted the OECD Pillar Two rules separately, in Law 151(I)/2024, and they are aimed at those groups. A typical owner-managed Cyprus company is outside them entirely; the 15% it pays from 2026 comes from the ordinary corporate rate, not from Pillar Two.

What are the penalties for filing the corporate return late?

From 2026 the fixed penalty for a late company return is €250, rising to €500 for a company with turnover or assets above €1 million. Tax paid late carries a 5% monetary charge, a further 5% after two more months, and interest at the public default rate, which is 3.5% for 2026. The cheapest fix is a calendar entry: the deadline moved forward with the reform, and an out-of-date filing routine is the most common cause of a late return we see.