If you own or plan to open a company in Cyprus, then understanding the tax system is essential. Cyprus has long been known for its low company tax rate, but changes are coming in 2025 that you need to be aware of.
In this article, we explain the current corporate tax rules, the upcoming increase to 15%, and what it means for your company if you're operating in Cyprus or planning to relocate there.
If you're looking to set up a company in Cyprus, we can help you navigate the legal setup and tax strategy. Check out our Company Formation Service contact us
What Is the Corporate Tax Rate in Cyprus for 2025? Currently, the standard corporate income tax (CIT) in Cyprus is 12.5%, making it one of the most attractive tax regimes in Europe. However, this is set to change.
In December 2024, the Cyprus Parliament approved legislation to increase the rate to 15%, aligning with the OECD’s global minimum tax framework for large multinational companies.
The new 15% rate is expected to apply to companies with a fiscal year beginning on or after 1 January 2025. As of now, final legislation is still under public consultation and has not been published in the Official Gazette, so the change isn’t legally binding yet.
Until then, the 12.5% rate continues to apply until the new law is officially enacted.
Will the 15% Corporate Tax Rate Affect Your Company? The 15% corporate income tax rate already applies to multinational enterprises and large local companies with consolidated annual revenues exceeding €750 million, in line with OECD guidelines.
However, Cyprus is now preparing to apply the 15% CIT rate universally, extending it to all businesses regardless of size as part of a broader tax reform.
While the final legislation is still pending, you should expect the new rate to apply from the 2025 tax year, even if you run a small or medium-sized business.
How Does Cyprus Compare to Other EU Countries Even at 15%, Cyprus will remain among the most competitive countries in Europe, according to Tax Foundation Europe
Country
Corporate Tax Rate (%)
Hungary (HU) 9.0% Bulgaria (BG) 10.0% Cyprus (CY) 12.5% (15% from 2025) Ireland (IE) 12.5% Lithuania (LT) 16.0% Romania (RO) 16.0% Croatia (HR) 18.0% Poland (PL) 19.0% Switzerland (CH) 19.6% Finland (FI) 20.0% Latvia (LV) 20.0% Sweden (SE) 20.6% Czechia (CZ) 21.0% Iceland (IS) 21.0% Slovakia (SK) 21.0% Average 21.5% Denmark (DK) 22.0% Estonia (EE) 22.0% Greece (GR) 22.0% Norway (NO) 22.0% Slovenia (SI) 22.0% Austria (AT) 23.0% Luxembourg (LU) 24.9% Belgium (BE) 25.0% Spain (ES) 25.0% Turkey (TR) 25.0% United Kingdom (GB) 25.0% United States (for comparison) 25.6% France (FR) 25.8% Netherlands (NL) 25.8% Italy (IT) 27.8% Germany (DE) 29.9% Portugal (PT) 30.5% Malta (MT) 35.0% (with refunds)
Other Company Taxes in Cyprus In addition to the company tax rate, you should be aware of the following business-related taxes:
Special Defence Contribution (SDC): 17% on dividends received from foreign companies taxed below 6.25%, and 3% on 75% of gross rental income from long-term leases.Capital Gains Tax (CGT): 20% tax on profits from the sale of real estate located in Cyprus, or shares in companies that own such property. Most other capital gains are exempt.Value Added Tax (VAT) : 19% standard rate. You must register for VAT if your annual turnover exceeds €15,600.Employer Payroll Contributions: Employers contribute to social insurance, the national healthcare system (GESY), and the Social Cohesion Fund.Final Thoughts: What Should You Do Now? While the 15% rate is not yet law, it’s likely to be implemented soon. If you're running a business in Cyprus, or planning to relocate, you should start reviewing your corporate structure and tax strategy.
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