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

Cyprus taxes a company's taxable profit at 15% for tax years from 2026, up from 12.5%. The old 12.5% still applies to profits of 2025 and earlier. You pay during the year in two provisional tax instalments, 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 rate is 15% for tax years from 2026, the same for every Cyprus tax-resident company whatever its size. The reform that raised it added no band for small companies and no turnover threshold.

The test for tax residency changed too. A company is Cyprus tax resident if it's managed and controlled from Cyprus. For an owner-managed company, that means the directors who actually take the decisions are here. From tax year 2026 there's a second test. A company incorporated in Cyprus is Cyprus tax resident by default, unless a double tax treaty provides otherwise. Under the old rule, a company incorporated in Cyprus escaped default residency by being tax resident somewhere else. That way out is gone.

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

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

The split will matter for a while, so keep the two computations visibly separate in your books. During 2026 a typical company is settling its 2025 tax at 12.5% and paying provisional tax on 2026 profits at 15%. It may also be paying out profits earned under both rates, each with its own dividend sums. If your ledger can't say which profit belongs to which year, every one of those calculations turns into guesswork. Everything else that moved is in our guide to the 2026 Cyprus tax reform.

What is corporation tax actually charged on?

Taxable profit, which is your accounting profit adjusted by the tax rules. You start from the profit in the financial statements and add back expenses that fail the deduction test. Then you 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 taxable profit differs.

The deduction test is the one every founder meets first. An expense is deductible when it's incurred wholly and exclusively in the production of income, and it needs a document behind it. The law then names specific exceptions. Private saloon car costs are not deductible at all. 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. That's why holding structures work the way they do here. And a loss year isn't wasted. Tax losses now carry forward for seven years from tax year 2026, up from five.

One myth to clear up, because we hear it every week. There's 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. A newly registered business can recover input VAT, the VAT it paid on its purchases, on services received up to six months before registration and on goods up to three years before.

When is the Cyprus corporate tax return due?

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

You file online. The 2025 return goes through TAXISnet, the Tax Department's older portal. The Tax Department has announced that income tax returns move to Tax For All, its newer portal, starting with the 2026 return, filed during 2027. From 2026 a late return costs a fixed penalty of €250 for a company, or €500 where turnover or assets exceed €1 million. Tax paid late 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 tax, collected early. The company files an estimate of the year's taxable profit by 31 July of the tax year. It pays tax on that estimate in two equal instalments, due 31 July and 31 December. You can revise the estimate up or down at any time until 31 December. The return then produces the real figure, and you pay the balance or get a refund. A company that starts up after 30 June files by 31 December and pays a single instalment on that date. It's a sensible new rule from 2026 for companies formed mid-year.

Say your 2026 profit lands at €100,000, so your final tax is €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. That's €600 you didn't 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. How to revise mid-year is in the provisional tax guide.

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

Corporate tax went up, and the taxes on paying out profit came down. SDC on dividends for Cyprus-domiciled shareholders fell from 17% to 5% for profits earned from 2026. Profits from before 2026 that are paid out by the end of 2031 keep the old 17%. The deemed dividend distribution rules, which charged SDC on part of the profit a company kept instead of paying out, are abolished for 2026 profits onwards. One last transitional round covers 2024 and 2025 profits. And stamp duty is abolished entirely from 1 January 2026. For an owner-director, 15% corporate tax followed by 5% SDC usually beats the old 12.5% plus 17%. We run those numbers in salary vs dividends in Cyprus.

What the reform left alone matters just as much. The IP Box, the regime for profit from qualifying intellectual property, kept its 80% deduction. With the higher rate, the effective rate on fully qualifying IP profit is now 3% from tax year 2026, up from 2.5% before. We explain the regime in the IP Box explained. The non-dom rules, which exempt people not domiciled in Cyprus from SDC, survive. You're still deemed domiciled in Cyprus only after being tax resident here for 17 of the 20 years preceding the tax year. Audited financial statements under IFRS, the international accounting standards, are still the rule for every Cyprus company. The smallest private companies got more room, though. A review engagement, a lighter check than an audit, can replace the audit where net turnover stays within €300,000 and gross assets within €500,000, both over two consecutive years. The turnover limit rose from €200,000 in February 2026.

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

It starts with whoever keeps your books. 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. The read-only bank feeds match transactions against invoices and recorded purchases as they arrive. So year-end starts from a ledger that's already reconciled, not from a folder of receipts. An independent auditor always performs the audit or review itself. 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 depends on your plan. 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 Plus, Sumly files the provisional tax and the annual return for you, but not the year-end accounts. On Premium your Sumly certified bookkeeper reviews the books, handles both provisional instalments and the annual return, and submits for you. On every plan a person reviews and files. Nothing goes to the Tax Department on autopilot.

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