Cyprus tax calculator 2026

How income tax is calculated
(and why it's lower than it looks)

IP Box grants an 80% deduction on qualifying IP profit (modified nexus approach). The remaining 20% is taxed at 15% → effective rate ≈ 3% (in 2025 at 12.5% it was ≈ 2.5%). Qualifying assets: patents and copyright-protected software — engine, source code, in-game IP. Marketing assets do not qualify: brand name, game title, logo. The qualifying fraction equals the nexus fraction. The IP Box regime itself was not changed by the 2026 reform.

Key mechanics (Art. 14 ITL): social insurance, GESY, provident fund and life insurance contributions are deducted from the tax base, but collectively capped at 1/5 (20%) of income (after the expat exemption). Order: (1) expat exemption −50% (gross ≥ €55 000); (2) minus contribution deduction (≤1/5 of base); (3) minus 2026 personal deductions (Art. 14B, separate 20% cap, household income ≤ €100k): children €1 000/1 250/1 500, mortgage/rent up to €2 000, EV/green up to €1 000; (4) the bracket scale applies to the remainder.

2026 brackets: 0% up to €22 000, 20% (€22–32k), 25% (€32–42k), 30% (€42–72k), 35% above €72 000. Social insurance 8.8% (ceiling €68 904) and GESY 2.65% (ceiling €180 000) are charged on full gross. Reference: €60 000 expat → tax base €24 000 → income tax €400, take-home €52 730.

Conditions for the 8% flat rate

From 2026 gains from exercising options are taxed at a flat 8% rate subject to: the scheme is pre-approved by the Tax Commissioner, the beneficiary is a Cyprus tax resident, vesting ≥ 3 years, rights are non-transferable, exercise price ≥ 50% of market value.

Caps: 2× annual salary per year and €1 million over 10 years; any excess is taxed at the standard scale (up to 35%).

‍Note: the approval regulations were still being finalised in mid-2026.

SDC, non-dom и GESY

SDC on dividends for domicile residents was cut from 17% to 5% (on profits distributed from 2026). Non-dom continues to pay 0% SDC.

Deemed domicile arises after 17 of the last 20 years of Cyprus residency; at that point an alternative SDC regime is available — €50 000/year (a lump-sum €250 000 for a 5-year period, up to two periods; new Art. 3Δ SDC Law).

Regardless of status, dividends paid to any Cyprus resident carry GESY 2.65% (ceiling €180 000). DDD was abolished from 2026.