Taxes in Cyprus – Overview 2026

Cyprus offers entrepreneurs one of the most attractive tax systems in the European Union – with 15% corporate tax, tax-free dividends and numerous additional benefits.

Corporate Income Tax

The Cypriot corporate tax rate is 15% on the worldwide profits of companies tax resident in Cyprus. This places Cyprus well below the EU average of approx. 21.5%. In Germany, the comparable burden is approx. 30% (corporate tax + solidarity surcharge + trade tax).

Tax residency requires that management and control takes place in Cyprus. The rate applies uniformly to all industries and company sizes.

Non-Domiciled Status (Non-Dom)

The Non-Dom status is the key tax advantage for those relocating to Cyprus. It exempts natural persons for 17 years from the Special Defence Contribution (SDC) on:

  • Dividends (regular SDC rate: 17%) → 0% as Non-Dom
  • Interest income (regular SDC rate: 30%) → 0% as Non-Dom
  • Foreign rental income (regular SDC rate: 3%) → 0% as Non-Dom

Result for entrepreneurs: A Cyprus Limited pays 15% corporate tax on profits. The dividend to the Non-Dom shareholder is 100% tax-free. The effective total tax rate from company profit to the shareholder's pocket is just 15%. In Germany it would be approx. 48%.

Personal Income Tax

Taxable Income (EUR)
Rate
0 – 22,000
0%
22,001 – 28,000
20%
28,001 – 36,300
25%
36,301 – 60,000
30%
60,001 – 100,000
35%
from 100,001
37%

The tax-free allowance of EUR 22,000 is significantly higher than in Germany (approx. EUR 11,604). Those living solely on dividends (tax-free as Non-Dom) pay 0% income tax in Cyprus.

IP Box Regime

Qualifying income from intellectual property (software, patents, trademarks) is taxed at an effective rate of just 3%. The regime is based on the OECD Nexus Approach and is fully EU-compliant.

Participation Exemption

Dividend income and capital gains from qualifying participations are 100% exempt from corporate tax. A qualifying participation requires a minimum 1% holding. No withholding tax on outgoing dividends, interest or royalty payments.

Further Tax Advantages

  • No inheritance or gift tax
  • Pension taxation: Foreign pensions taxed at flat 5% (after EUR 3,420 allowance)
  • 50% salary exemption for first-time Cyprus employees earning over EUR 55,000/year (17 years)
  • 65+ DTAs including with Germany, Austria and Switzerland
  • 60-day rule: Tax residency from just 60 days per year under certain conditions
Frequently Asked Questions About Taxes in Cyprus
What is the corporate tax rate in Cyprus?

The corporate tax rate is 15% on worldwide profits of tax-resident companies.

What is the Non-Dom status?

The Non-Dom status exempts natural persons for 17 years from SDC on dividends (17%), interest (30%) and foreign rental income (3%). Dividends are 100% tax-free.

Do I need to spend 183 days in Cyprus?

No. The 60-day rule allows tax residency from just 60 days per year – provided you run a business, maintain a residence and are not tax resident elsewhere.

Is there a DTA with Germany?

Yes. A comprehensive double taxation agreement prevents double taxation on income, dividends, interest and royalties.

What is the IP Box Regime?

Qualifying IP income (software, patents) is taxed at just 3% effective rate. EU-compliant, based on the OECD Nexus Approach.

What is the income tax allowance?

The tax-free allowance is EUR 22,000. Income up to this amount is tax-free. In Germany the allowance is approx. EUR 11,604.

Is there inheritance tax in Cyprus?

No. Cyprus levies neither inheritance tax nor gift tax. Wealth transfers are completely tax-free.

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