CYPRUS Law and Practice Contributed by: Stella Strati, Patrikios Legal
Shifting (MLI/BEPS/OECD/G20) (the “Multilateral Instrument”, or MLI). 9.2 Government Policy and Objectives Approach The general attitude of the Cypriot government is to effectuate the BEPS recommendations by improving transparency but at the same time maintain the com - petitiveness of the local tax regime by providing vari - ous incentives to Cyprus tax residents (both domiciled and non-domiciled). Both Pillars One and Two have been given effect in Cyprus. In 2024, the House of Representatives of Cyprus approved the implementation of the Council Directive (EU) 2022/2523 of 14 December 2022 on ensuring a global minimum level of taxation for multi - national enterprise groups and large-scale domestic groups in the Union (the “Pillar Two Directive”) into domestic legislation (the “GMT Law”). Furthermore, pursuant to the recent tax reform, which was approved in December 2025 and has been in force since 1 Janu - ary 2025, the corporate tax rate is 15%. At the same time, the Cypriot government provides further incentives to attract inward investment. This strategy commenced in 2021. As mentioned in 2.3 Special Incentives , the start-up visa scheme has been revised, and is now more effective and flexible. The main goal of the Cypriot government is to enhance innovation and to develop an entrepreneurship-friend - ly landscape at the local level. Furthermore, a digital nomad visa for third-country nationals wishing to live in Cyprus yet work for com - panies operating from abroad, is available. The ceil - ing for people to benefit from this digital nomad visa scheme is 500 resident permits. Also, the tax benefit provided in relation to invest - ments in innovative SMEs, has been extended until 31 December 2026 (see 2.3 Special Incentives). Further key reforms include: • the provision of tax exemptions to highly skilled foreign employees;
• the provision of incentives for highly skilled foreign employees to apply for naturalisation after five years of residence and work in Cyprus; and • the establishment of a Business Facilitation Unit that operate as the focal point of contact for: (a) companies with foreign interests wishing to relocate to Cyprus; and (b) businesses operating in specific areas of economic activity (eg, hi-tech or innovation companies, pharmaceutical and shipping com - panies, and companies operating in the field of biogenetics and biotechnology). 9.3 International Tax As mentioned, Cyprus has recently implemented new tax rules, applicable as of 1 January 2026. Pillar Two has been given effect in Cyprus. Pursuant to the new tax rules, the corporate tax rate is now 15%. Nevertheless, for the purpose of maintaining the competitiveness of the Cyprus tax regime, Cyprus has adopted other measures to mitigate and coun - teract the increase of the corporate tax rate. Namely, the SDC rate on dividends has been reduced to 5% (from 17%), the SDC on rental income has been abol - ished, the stamp duty fee has been abolished, the tax-free threshold for individuals has been increased and adjustments have been made to the intermediate personal income tax bands. Also, a number of allow - ances have been provided to families. 9.4 Competitive Tax Policy Objectives Cyprus is viewed as having a competitive tax system that offers a number of incentives and advantages. The benefits of the Cypriot tax regime include: • an absence of restrictions on foreign share owner - ship; • the absence of withholding taxes on dividends or interest; • the sale of shares and other titles is exempt from tax; • one of the lowest corporate tax rates in the EU; and • a number of tax exemptions for non-Cyprus tax residents (or non-domiciled).
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