Filenews 4 July 2025 - by Eleftheria Paizanou
Twelve tax changes for businesses and four amendments for individuals will come about with the tax reform as prepared by the Government, with the intention of being implemented on January 1, 2026.
During yesterday's session of the National Council, the President of the Republic, Nikos Christodoulides, briefed the leaders of the parliamentary parties on the progress of the preparation of the tax reform bills.
The Minister of Finance, Makis Keravnos, who participated in the meeting, informed the political leaders that the preparation of the bills, which will be taken to the Legal Service for legal and technical review, has been completed.
He also told them that after the elaboration, they will be put to public consultation for three weeks, so that the interested parties can submit their proposals. As Makis Keravnos said, the bills will be submitted to the Parliament in September, so that they can be approved before the end of the year, so that they can be implemented from January 2026.
P.D.: No to uncertainty
According to information from "F", President Christodoulides told the leaders of the parties that the tax reform will increase and strengthen the competitiveness of Cyprus. At the same time, he made recommendations to the parties to be particularly careful with the amendments they will submit, which should not put the Cypriot economy in trouble.
As "F" is informed, the President of the Republic made reference to the parliamentary elections of May 2026 and asked the parties to ensure that their actions on tax reform are such that they do not affect the economy and do not cause uncertainty in the investment climate and in general.
For his part, Government Spokesman Konstantinos Letymbiotis said that the aim is for the legislative processing to be completed in August 2025, so that the bills can then be brought before the Parliament.
The leaders of the parties were also informed about the bilateral meetings that took place at the Ministry of Finance, as well as about the opinions received by the government from foreign experts.
However, opposition parties have indicated that, before the bills are sent to Parliament, it would be good for the Ministry of Finance to proceed with consultations with them, so that they know the exact provisions of the Government's legislative proposals.
Changes for individuals
- Increase of tax-free income to €20,500 from €19,500 (increase of €1000), differentiation of tax scales and transfer of the maximum tax rate of 35% to taxable income of more than €80,000.
- For annual incomes up to €20,500 no tax will be imposed, from €20,501-€30,000 the tax will be 20% and for incomes from €30,001 to €40,000 the tax rate will be 25%. For incomes from €40,001 to €80,000 a 30% tax will be imposed and for incomes over €80,000 the tax will be 35%.
- Depending on the household income, tax deductions will also be granted, based on the income criterion of the total gross income of the household with two working partners or spouses up to €80,000, €1000 for each child, €1000 for each student, €1500 for instalments of a serviced housing loan and €1000 for a green upgrade of a first home.
Changes for businesses
- Increase of corporate tax from 12.5% to 15%.
- Abolition of the estimated distribution of dividends and the reduction of the withholding tax on the distribution of actual dividends to 5%.
- In order for the tax residence to be considered in Cyprus, the 60 days of residence are strengthened while the 183 days remain. That is, in order to be eligible, some people must maintain a permanent property in the country and not reside in another country for more than 183 days during the same year.
- The legal framework of Non Dom is maintained. This is a special tax regime. That is, if someone who is not a resident of Cyprus but lives here, in order to save taxes. It mainly concerns taxpayers from abroad, including third countries, who own property and income.
- The 1.5% premium for insurance companies is abolished.
- Granting incentives for employers to provide shares to employees.
- Taxation of Cryptocurrency Profits
- Interim measures for the taxable remuneration of directors
- Abolition of the extraordinary defence levy
- Non-payment of capital gains tax for the consideration of real estate.
