CYPRUS Trends and Developments Contributed by: Ioanna Solomou, Stephanos Ayiomamitis and Andria Kouloumi, Michael Kyprianou & Co LLC
Michael Kyprianou & Co LLC Gladstonos 116 M.KYPRIANOU HOUSE Floor 3 & 4 3032, Limassol Cyprus
Tel: +357 2536 3685 Fax: +357 2536 3698 Email: info@kyprianou.com Web: www.kyprianou.com
Key changes to the corporate tax framework One of the most notable amendments is the increase in the corporate income tax rate from 12.5% to 15%. While this represents a shift from Cyprus’s historically low corporate tax environment, the new rate remains competitive within the European Union (EU) and aligns Cyprus with the global minimum tax discussions driv - en by international initiatives. In parallel, the extension of the tax loss carry-forward period from five to seven years provides additional flexibility for businesses, particularly start-ups and capital-intensive ventures. This change allows com - panies more time to offset early-stage losses against future profits, thereby improving long-term tax effi - ciency. Another important development concerns the amor - tisation of intangible assets. Intangible assets with an indefinite useful life will now be amortised over a fixed period of 20 years. This introduces greater certainty in tax treatment and aligns the regime more closely with international practices. The reform also introduces a 20% “super deduction” on qualifying scientific research and development expenditure for the period 2025 to 2030. This measure enhances Cyprus’s existing innovation incentives and strengthens its positioning as a jurisdiction support - ive of technology-driven businesses and intellectual property development.
This article outlines two key legal developments in Cyprus, focusing on the ongoing tax reform and the introduction of a new framework for the screening of foreign direct investments, effective as of 1 January 2026 and 2 April 2026, respectively. Both are set to significantly shape the country’s regulatory and invest - ment landscape. Recent Tax Reform in Cyprus: Evolution Rather Than Transformation As of 1 January 2026, Cyprus has implemented a long-anticipated tax reform following years of public debate and political discussion. While much of the media attention has focused on the impact on domes - tic taxpayers and households, the broader question for the market is whether the reform meets the expec - tations of international investors and businesses con - sidering Cyprus as a base of operations. The reform introduces amendments across several key legislative frameworks, including the Income Tax Law, the Special Defence Contribution Law, the Col - lection of Taxes Law and the Capital Gains Tax Law. From an international business perspective, howev - er, the most relevant developments arise under the Income Tax Law, which forms the core of Cyprus’s corporate and personal tax system. This section highlights the principal changes and assesses their practical implications, particularly in the context of cross-border investment and entrepre - neurial activity.
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