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Cyprus Introduces Broad Personal Tax Reform From 2026

Modernizing A Global Tax Hub

Cyprus has introduced a broad overhaul of its tax framework effective January 1, 2026, aimed at strengthening the country’s position as an international business and investment hub. The reform updates personal taxation rules, expands targeted exemptions and modernizes existing reliefs in an effort to attract internationally mobile professionals, foreign executives and high-net-worth individuals.

Redefining Tax Residency

The revised regime maintains Cyprus’ existing residency structure while clarifying the criteria under which individuals qualify as tax residents. Under the updated Income Tax Law of 2002, tax residency can be established either through the traditional 183-day test or the alternative 60-day test.

183-Day Test

Individuals physically present for an aggregate of 183 days or more within a calendar year are automatically classified as Cyprus tax residents. Consequently, their worldwide income is subject to Cypriot taxation, irrespective of remittance.

60-Day Test

This alternative residency criterion applies to those who have not established tax residency in another country. To qualify under the 60-day test, an individual must:

  1. Maintain a permanent residence in Cyprus;
  2. Carry out a business or be employed with a Cyprus-based entity for the entire period; and
  3. Be physically present in Cyprus for no less than 60 days during the tax year.

Statutory rules clearly delineate how days are counted, guaranteeing consistency for both the 183-day and 60-day tests.

Progressive Income Tax And Exemptions

The reform introduces updated progressive tax bands, which are applicable as follows:

Income Band Tax Rate
Below €22,000 0%
€22,001 to €32,000 20%
€32,001 to €42,000 25%
€42,001 to €72,000 30%
€72,001 and above 35%

Additional exemptions, such as those on dividend income, securities gains, certain export remunerations, and select foreign exchange gains, further streamline the tax liability for qualifying individuals.

Enhancing Competitiveness Through The Non-Dom Regime And Employment Incentives

A cornerstone of Cyprus’ personal tax framework is its non-domicile regime, which has been prominent since 2015. The regime offers significant tax relief through exemptions from special defence contributions on passive income. Notably, individuals not deemed domiciled in Cyprus benefit from full exemption until they complete 17 years of residency, preserving favourable long-term conditions.

Employment Income Tax Exemptions

Further bolstering its reputation as a magnet for global talent, Cyprus provides tiered tax exemptions for foreign employees. Key highlights include:

  • A 50% exemption for high-income first employment, applicable to those earning over €55,000 annually who have not been local residents for the preceding 15 years; this relief lasts for 17 tax years.
  • A 20% exemption for mid-level foreign employees transitioning from non-resident employment, with a cap of €8,550 per annum over seven tax years.
  • A 25% “brain gain” exemption, designed to attract skilled professionals, which applies for up to seven tax years and is available only once in a lifetime.

Legacy exemptions continue to benefit those whose employment commenced under previous statutory frameworks, maintaining continuity and stability for long-term stakeholders.

Innovations In Equity-Based Remuneration And Broader Employment Benefits

The reform further introduces preferential taxation for employee share option plans and share awards, applying an 8% tax rate to qualifying long-term incentive schemes. Authorities said the measure aligns executive remuneration structures more closely with international practices. At the same time, the broader definition of taxable employment income now incorporates pre-employment bonuses and selected contractual termination benefits, helping clarify the legislative framework.

Supporting Family Welfare And Sustainable Investments

Beyond executive and corporate taxation, the reform package also includes measures designed to support households and environmentally focused investment activity. Enhanced deductions linked to children, housing relief and investments in electric vehicles and renewable energy projects form part of the updated framework.

Conclusion

The overhaul of Cyprus’ personal tax framework reinforces the country’s broader strategy of attracting international investment, executive mobility and globally mobile professionals. Updated residency criteria, revised tax bands, non-dom provisions and expanded employment incentives collectively strengthen Cyprus’ position within the European market.

Cyprus Crypto Users Face New Risks As MiCA Rules Take Effect

Why Investors Need To Check The Company Behind Their Crypto Platform

Crypto users in Cyprus are being urged to verify exactly which company holds their assets after the EU’s Markets in Crypto-Assets Regulation (MiCA) transition period ended on July 1, 2026.

MiCA rules for crypto-asset service providers have applied since December 2024, but Cyprus allowed companies operating under its previous national framework to continue temporarily. CySEC required providers wishing to remain in the market to apply by February 27, 2026.

The end of the transition means that appearing on an old national register is no longer enough. Investors must check the specific legal entity providing the service and the activities it is authorised to perform.

Two Regulatory Routes

CySEC maintains separate registers for providers authorised under Article 63 and companies using the Article 60 notification route.

The lists should not simply be treated as a count of licensed crypto exchanges. Providers have different regulatory statuses and may be authorised for different services, including custody, transfers, exchanges or operating trading platforms.

Companies authorised elsewhere in the EU can also serve Cypriot customers through MiCA passporting. Investors should therefore check the wider ESMA register.

Familiar Brands Can Still Be Used In Scams

MiCA authorisation applies to a specific legal entity, not automatically to every website, subsidiary or service using the same brand. Fraudsters can copy a legitimate company’s name, logo and licence number while changing its website or payment details.

The regulatory transition creates another opportunity for scammers. They can imitate legitimate notices about account closures or transfers and claim that customers must urgently move their assets to a new “regulated” platform.

In its July announcement, CySEC warned that customers using unauthorised providers do not receive MiCA protections and advised investors to verify providers through ESMA.

A Wider European Shake-Up

The changes affect the broader European crypto market. VASPnet estimated that more than 1,700 unlicensed crypto companies could face closure, relocation or restructuring after the transition period.

ESMA’s register contained 323 authorised providers at the end of July, while TRM Labs identified 1,343 operating providers in the European Economic Area on July 1, including 281 with MiCA authorisation. The different figures reflect different methodologies, but point to a substantial number of providers operating without the new authorisation.

ESMA instructed unauthorised companies to stop accepting new EU customers, opening accounts and marketing their services, while allowing limited activity needed for an orderly withdrawal.

What Investors Should Check

MiCA introduces common requirements for areas such as governance, disclosures and safeguarding client assets, but it does not make crypto investments risk-free.

For Cyprus users, the key questions are which legal entity provides the service, what it is authorised to do and whether the website or contact details are genuine.

Requests to transfer assets urgently, pay recovery fees, reveal private keys or install remote-access software should be treated as red flags. MiCA may bring greater clarity to the market, but the transition has also created a new opportunity for criminals to exploit a very real regulatory change.

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