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Cyprus tax reform 2026: what changed for your books.

Changes reached the corporate tax rate, dividend tax and loss relief, and introduced a new tax on crypto gains, most of it effective from 1 January 2026. Here is what to update in client files this quarter.

Tax10 July 20268 min readVincent Wahidi, founder
Published 10 July 2026. This is a summary for accounting practices, not tax advice; see the note at the end.

Key takeaways

  • Corporate income tax rose from 12.5% to 15% and SDC on dividends dropped from 17% to 5%, both effective for periods from 1 January 2026; rebuild provisional and deferred tax workings on the new rates.
  • Deemed dividend distribution (DDD) is abolished going forward, but prior years' deemed distributions and SDC already paid or accrued under the old rule are not retroactively undone.
  • Loss carry-forward is extended from 5 to 7 years, so some losses that looked set to expire may now survive longer, which can also affect deferred tax asset recognition.
  • Crypto-asset gains now carry a dedicated 8% tax, making acquisition cost and disposal proceeds a tax record rather than a management-accounts nicety.
  • Stamp duty on property contracts is abolished from 1 January 2026; the TFA income-tax module rollout has moved to 2027, while VAT, VIES, and PAYE are already live.

01What changed, at a glance

Eight changes worth tracking, most effective from 1 January 2026:

AreaChange
Corporate income tax12.5% → 15%, effective 1 January 2026
Special Defence Contribution on dividends17% → 5%
Deemed dividend distributionAbolished
Loss carry-forwardExtended from 5 to 7 years
Crypto-asset gainsNew 8% tax
Stamp duty on property contractsAbolished from 1 January 2026
R&D expenditure120% super-deduction, through 2030
TFA income-tax moduleRollout moved to 2027 (VAT, VIES and PAYE already live)

02The corporate tax rate: 12.5% to 15%

The corporate income tax rate goes up from 12.5% to 15%, effective for accounting periods from 1 January 2026. The rate is the easy part; the places it touches are not:

  • Tax provisions. Year-end and interim provisioning models need the new rate, for 2026 profits and for any true-up of a prior estimate.
  • Deferred tax. Deferred tax assets and liabilities are measured at the rate expected when the timing difference reverses, so a client's working paper needs a re-check, not a roll-forward.
  • Payments on account. Provisional tax estimates for 2026 should be rebuilt on 15%, not carried over from a 12.5% assumption.

03Dividends: the SDC cut and the end of deemed distribution

Special Defence Contribution (SDC) on dividends drops from 17% to 5%, changing the arithmetic of shareholder-remuneration planning. And deemed dividend distribution (DDD) is abolished: Cyprus companies no longer face a deemed distribution, or the associated deemed SDC, on undistributed accounting profits after the old two-year clock ran out.

DDD's abolition is the more operational change: any deemed-distribution tracking file, with its two-year clock and deemed-SDC projection, can be retired for periods going forward.

Keep the historical files: prior years' deemed distributions, and any SDC already paid or accrued under the old rule, are not retroactively undone.

04Losses, R&D, and the new crypto tax

Loss carry-forward is extended from 5 to 7 years. Any schedule tracking losses due to expire under the old 5-year window is worth revisiting: some may now survive longer, which can affect deferred tax asset recognition.

The R&D super-deduction, 120% of qualifying expenditure, continues through 2030. For clients running qualifying research and development, keep R&D costs coded distinctly in the ledger rather than folded into general operating expenses, so the deduction is defensible at year-end.

Crypto-asset gains now carry a dedicated 8% tax, new territory for most practices: a new calculation line for any client holding or trading crypto-assets, and acquisition cost and disposal proceeds become a tax record. Open that record now, not at filing time.

7years loss carry-forward, up from 5
120%R&D super-deduction, through 2030
8%new tax on crypto-asset gains

05Stamp duty and the TFA income-tax timeline

Stamp duty on property contracts is abolished for contracts from 1 January 2026. That is one line no longer accrued for or chased as a completion cost; contracts predating the change still followed the old rule.

The TFA (Tax For All) portal's income-tax module has not launched yet; its rollout has moved to 2027. VAT, VIES, and PAYE are already live on TFA and unaffected. Income tax filing continues on the existing process: nothing to change yet, only a date to watch for 2027.

06A checklist for this quarter

Five things worth doing across the client book before the next filing cycle:

  1. Rebuild tax provisioning models at 15%, including deferred tax balances re-measured at the new rate.
  2. Retire deemed-distribution tracking for 2026 onward, keeping prior-year files untouched.
  3. Re-check any expiring-loss schedule against the new 7-year carry-forward window before writing a loss off.
  4. Ask clients about crypto-asset activity and open a record for acquisition cost and disposal proceeds.
  5. Confirm the income-tax filing workflow client by client, since TFA income tax is not live yet and there is nothing to migrate.

This is a summary of publicly announced changes, not tax advice. Effective dates, transitional rules, and edge cases should be confirmed against the published legislation, or with a qualified tax adviser, before any client-facing decision.

If your practice is rebuilding client workbooks for the new rate, the year-end accounts prep guide walks through a working-paper structure where a rate change touches one column, not every file.