Overview of the 2025 Cyprus Tax Reform

In a landmark shift aimed at aligning Cyprus with international tax standards, the government has announced a tax reform package that will take effect in 2025. The most notable change is the increase in the corporate tax rate from 12.5% to 15%, a move that brings Cyprus closer to the OECD’s global minimum tax framework.

This adjustment reflects Cyprus’s commitment to maintaining its reputation as a transparent and compliant international business hub, while also ensuring fiscal sustainability.

Introduction of a Flat 5% Dividend Tax

Alongside the corporate tax increase, the reform introduces a flat 5% tax on corporate dividends distributed to shareholders. This tax will apply uniformly to all shareholders, regardless of whether they are domiciled or non-domiciled in Cyprus.

Previously, non-domiciled shareholders often benefited from exemptions on dividend income. The new policy eliminates this distinction, creating a simplified and equitable dividend taxation structure.

Implications for Cyprus-Based Companies

Businesses operating in Cyprus should prepare for the following impacts:

• Reduced post-tax profits due to the higher corporate tax rate
• New tax obligations for shareholders receiving dividends
• Potential restructuring of dividend distribution strategies
• Increased importance of proactive tax planning and compliance

Companies with international shareholders or complex holding structures may need to reassess their tax exposure and consider adjustments to remain efficient under the new regime.

How Cyprus TX Accounting Can Help

At Cyprus TX Accounting, we provide expert guidance on navigating tax reforms and optimizing your corporate tax strategy. Our services include:

• Corporate tax planning under the new 15% rate
• Dividend tax advisory for both local and international shareholders
• Compliance reviews and restructuring support
• Ongoing updates on Cyprus tax legislation and regulatory changes

Our team of experienced Cyprus accountants and tax consultants is ready to help your business adapt to the evolving tax landscape with confidence and clarity.

Contact Us

For tailored advice and strategic tax planning, reach out to Cyprus Tax Accounting today.