Filenews 9 January 2026 - by Eleftheria Paizanou
From the 1st of this year, the withholding of income tax from the earnings of employees began with the new tax regime approved last month by the Parliament, in the context of the tax reform, which provides for an increase in tax-free income to €22,000 and the granting of increased tax deductions depending on the composition of the family and incomes.
However, we will submit the tax return with the new data within 2027 and will concern the tax year 2026. Usually, the submission of tax returns takes place between April and July 31st. This will be done through the Unified Electronic System (Tax For All).
This year, the tax return for the tax year 2025 will be submitted with the same data as we submitted the income returns for the tax year 2024. With the tax-free allowance being €19,500 and the existing tax scales, i.e. those taxpayers who have more than the specific income have the obligation to submit a tax return. The only difference this year will be that tax returns for 2025 will be submitted through Tax For All instead of taxisnet.
Therefore, in 2027, taxpayers with a gross income (i.e. the income before deduction of exemptions and deductions) over €22,000 will have the obligation to submit income returns for the tax year 2026. Also, they must be tax residents of Cyprus for a period beyond 183 days. In fact, the submission of tax returns will be mandatory for all taxpayers between the ages of 25 and 71. It is noted that the Council of Ministers may by decree exempt specific categories of persons from the obligation to submit a tax return.
In addition to the increase of the tax-free allowance to €22,000, the change in the tax rates of the tax scales, the tax reform introduces a series of important new personal deductions aimed at relieving natural persons who are tax residents of Cyprus, based on their marital status and income criteria. The discounts that will be granted will be depending on the number of dependent children, students, the expenses for rent and interest on a performing mortgage loan for the main residence as well as for the energy upgrade of the main residence and the purchase of an electric vehicle.
Tax Deductions Form
The new personal deductions will be declared in the form T.F.59 – declaration to claim the tax deductions, for the calculation of the withheld tax and contributions by the employer.
Families with incomes of up to €100,000 benefit from the additional discounts on the basis of children, students, mortgage interest, rents and green investments. (without children or 1 to 2 children), incomes up to €150,000 (3-4 children) and incomes up to €200,000 for families with five or more children. For single persons, their income must not exceed €40,000. For the first dependent child and student the discount will be €1000, for the second dependent child €1250 and for the third and each additional dependent child is €1500. The discounts for interest and rents will be €2,000 and for green investments €1000.
In the form Τ.Φ 59, the final amount of the discount per category should be declared, without mentioning income criteria or number of children, e.g. for two dependent children a total child discount of €2,250 is declared (€1,000 for the first and €1,250 for the second dependent child).
The new personal deductions do not reduce the taxable income on which the maximum deduction of 1/5 for insurance premiums, GHS contribution and contributions to funds and schemes is calculated4, and are granted additionally.
Prerequisites
The basic conditions for the provision of the new personal deductions are that spouses or cohabitants with civil cohabitation or without and with common children consent to the disclosure of their tax information to each other, in order to confirm that the total family income does not exceed the income criteria.
Consent will be given in a special field on the tax return of each spouse or partner. The tax returns of spouses or civil partners or cohabitants without a cohabitation agreement and with common children or of the single person must be submitted within the prescribed deadlines.
For the calculation of family income, the gross income of spouses or cohabitants from work, pensions, rents, dividends, alimony, allowances and sponsorships from the state will be taken into account. The income of children, pupils and students, child allowances, student sponsorship and care, scholarships and allowances for people with disabilities and chronic diseases are excluded from the calculation. In case the taxpayer lives with another person with whom they have common children, the gross income of this other person is also taken into account.
