The requirement to submit an Annual and Monthly Employer’s Declarations for Withheld Taxes and Contributions (for all months of the year), applies only to employers who withhold and pay Income Tax (PAYE), or/and General Healthcare System Contribution (GHS), or/and are required to pay Employer Contributions to GHS on a monthly basis to the Tax Department.

It is clarified that to be able to proceed with the payment of withheld taxes and contributions to the Tax Department, employers must first proceed with the submission the respective monthly TD7, based on which the liabilities will be created in the Tax For All system (TFA). It is recommended that the monthly TD7s also include the individuals for whom no withholdings are made; otherwise, the details of these individuals (including their annual income) should be included, in the final monthly declaration of December.

Employers with personnel and/or officers (Directors/Secretaries) with remuneration that does not have withheld taxes and/or contributions payable to the Tax Department (or/and Employer Contributions payable to GHS) are required to submit an Annual Declaration and at least one (1) Monthly Employer’s Declaration for withheld Taxes and Contributions.

• Companies Without Employees or with Employees Without Remuneration

Companies without any employees are not required to submit any TD7s. Also, the Tax Department have also clarified via FAQ (

TAX DEPARTMENT – FAQ), that for tax year 2025, companies that only have employees without remuneration, are not required to submit any TD7 forms.

Taxpayers who have received notifications regarding the above matter and do not have an obligation to submit these Declarations, either because they have no employees or their employees receive no remuneration, are advised to disregard such notifications.

• New Submission Deadlines

The relevant deadlines to submit the TD7s and pay the corresponding taxes and contributions are as follows:

• Monthly TD7s for July 2025 – December 2025: Due by 31 March 2026
• Annual TD7 for 2024: Due 31 March 2026
• Annual TD7 for 2025: Due by 31 May 2026

1.Income Tax Law

Income/corporation tax

• Corporate Income Tax (CIT) rate increased from 12.5% to 15%
• Tax loss carry forward extended from 5 to 7 years
• Additional 20% “super deduction” for qualifying R&D expenses (2025–2030)
• Amortisation of intangible assets with indefinite life capped at 20 years
• Entertainment expenses deductible limit increased to lower of 1% of turnover and €30,000
• Restriction on interest deductibility for non-business assets continues beyond 7 years
• Introduction of crypto taxation at a flat rate of 8% (both for individuals and companies and subject to conditions)
• Share option schemes may be taxed at 8% flat rate (subject to conditions)

Residency & Corporate Residence

• Removal of the requirement for individuals not to be tax resident elsewhere under the 60-day rule
• Corporate tax residency can be established by incorporation, unless overridden by a DTT (i.e. a Cyprus tax registered company is considered Cyprus tax resident by default)

Individuals

• Tax-free income band increased from €19,500 to €22,000
• New income tax deductions (subject to income thresholds) for:
  • Dependent children / university students
  • Interest or rent for main residence
  • Insurance against natural disasters
  • Energy efficiency expenses
  • Acquisition of electric vehicles

Other

• Ex-gratia payments (Retirement (including early retirement) / Termination of employment or appointment / “Golden handshake” payments / Compensation for loss of office above €200,000 taxed at 20%
• From 1 January 2031, redemptions of fund units treated as dividends (instead of disposal of titles)

2.Special Contribution for the Defence (SDC)

• SDC on dividends for Cyprus-domiciled individuals reduced from 17% to 5%. (non-domiciled individuals subject only to GESY)
• SDC on rental income abolished (both for companies and individuals) (rental income still subject to GESY)
• Deemed Dividend Distribution rules abolished for profits earned after 1 January 2026 (DDD payments applicable until 31 January 2028 relating to profits of the year 2025)
• Profits earned up to 31 December 2025 remain subject to SDC at 17% upon distribution
• New deemed dividend rules introduced at 10%, covering:
  • Private use of company assets by shareholders
  • Transfer of assets to shareholders below market value
• Non-domicile SDC exemption may be extended beyond 17 years upon payment of €250,000 per additional 5-year period
• Penalties and fines significantly increased
• From 1 January 2031, fund unit redemptions treated as capital reductions

3.Capital Gains Tax (CGT)

• Shares deriving 20% or more of their value from Cyprus immovable property fall within CGT (previously 50%)
• Increased tax-exempt thresholds for disposals of immovable property, agricultural land, and main residence
• Exemption extended to shares listed on regulated markets of recognised exchanges
• New exemption for unlisted shares up to €50,000 per annum
• Land-for-building exchanges exempt from CGT (αντιπαροχή). In this case CGT is deferred to subsequent disposal of the building/flat/shop etc)
• Penalties and fines increased

4.Assessment & Collection of Taxes Law

• Mandatory personal tax return (TD1) filing for:
  • All tax residents aged 25–71, regardless of whether they have income or not
  • All tax residents with income, regardless of age
• New tax return & payment deadline for audited taxpayers: 31 January (13 months after year-end)
• Partnerships now required to file tax returns (in addition to partners)
• Objection deadline extended to 60 days
• Statute of limitations remains 6 years, calculated from return submission date (as opposed from the end of the tax year)
• Audit threshold for individuals increased from €70,000 to €120,000
• Commissioner may suspend business operations for serious non-compliance
• From 1 July 2026, rent payments exceeding €500 must be made electronically (no cash)
• Directors remain liable for actions during their tenure even after resignation
• Increased penalties and fines across the board
• Commissioner of Taxation empowered to pledge shares where tax arrears exceed €100,000

5.Stamp Duty Law

• Stamp Duty is abolished
• Stamp duties for obtaining tax residence / tax clearance certificates still apply

Who is obliged to prepare the SIT?

The SIT reporting obligation is applicable for all Taxpayers who have transactions between related parties on an annual basis.

When is the deadline for preparation and submission of the Local File?

The SIT shall be submitted to the Tax Department, via Tax For All (TFA) portal concurrently with the income Tax Return

PENALTIES

What is the penalty for not submitting the SIT on time?

The penalty for non-submission of the SIT by the deadline as provided in the Regulations (e.g., the submission deadline of the income tax return) is €500.

When are companies related?

(1) If the same person has, directly or indirectly, at least 25% of the voting rights or of the share capital or is entitled to at least 25% share of the income of both companies

(2) lf the same person and persons connected with that person holds, directly or indirectly, at least 25% of the voting rights or of the share capital or are entitled to at least 25% share of the income of both companies.

(3) If a group of two or more persons holds, directly or indirectly, at least 25% of the voting rights or of the share capital or are entitled to at least 25% share of the income of each company and the groups either consist of the same persons or could be regarded as consisting of the same persons by treating (in one or more cases) a member of either groups replaced by a person with whom that person is connected.

When is a company connected/related with a person?

(1) A company is connected with another person if this person holds, directly or indirectly, at least 25% of the voting rights or of the share capital or is entitled to at least 25% share of the company’s income or if that person and persons connected with him together holds, directly or indirectly, at least 25% of the voting rights or of the share capital or are entitled to at least 25% share of the company’s income.

(2) Any two or more people acting together to secure, directly or indirectly, at least 25% of the voting rights or of the share capital or are entitled to at least 25% share of the company’s income shall be treated in relation to that company as connected with one another and with any person acting on the directions of any of them to secure directly or indirectly at least 25% of the voting rights or of the share capital or is entitled to at least 25% share of the company’s income.

What should a taxpayer do if it has transactions between connected/related persons?

In accordance with the new provisions of the Income Tax Law, connected persons which are tax residents in Cyprus, or permanent establishments in Cyprus of non-tax resident persons (Liable Taxpayers) have the obligation to prepare:

(1)  a ΤΡ documentation file and

(2) a Summary of Information Table (SIT) for transactions falling within the ambit of Section 33 of the Income Tax Law (e.g., intercompany transactions).

What is a TP documentation file?

The TP documentation file consists of:

• The Master File
• The Cypriot (local) file

MASTER FILE

What is the Master File?

The master file contains standardized information relevant for all group members of a multinational enterprise (ΜΝΕ). More specifically, the Master File should provide an overview of the ΜΝΕ group business, including the nature of its global business operations, its overall transfer pricing policies, and its global allocation of income and economic activity in order to assist tax administrations in evaluating the presence of significant transfer pricing risk. In general, the master file is intended to provide a high-level overview in order to place the ΜΝΕ group’s transfer pricing practices in their global economic, legal, financial and tax context.

Who is obliged to prepare the Master File?

The master file obligation is applicable for Liable Taxpayers when they act as the Ultimate Parent Entity (UPE) or Surrogate Parent Entity (SPE) for Country-by-Country Reporting purposes, as defined in the Administrative Cooperation in the field of Taxation Law.

More specifically, a master file obligation will arise for Liable Taxpayers if both of the below

conditions are met:

(1) The taxpayer is part of an ΜΝΕ Group with a Country-by-Country Reporting obligation (e.g., with consolidated revenue above €750 million) AND

(2) The taxpayer is either the Ultimate Parent Entity (UPE) or the Surrogate Parent Entity (SPE).

When is the deadline for preparation and submission of the Master File?

The master file must be prepared together with the income tax return for the respective tax year ( e.g. 15 months after calendar year-end).

The master file must be made available by the liable Taxpayer at any time after the preparation deadline and submitted to the Tax Department upon request within 60 days.

When should the Master File be updated?

The master file is to be updated annually, and specific reference made to any significant changes of the market conditions that may impact the information and data included in the master file.

Cypriot File (Local File)

What is the Local File?

The local file refers specifically to material transactions of the local taxpayer. In contrast to the master file, which provides a high-level overview as described above, the local file provides more detailed information relating to specific intercompany transactions and helps to meet the objective of assuring that the taxpayer has complied with the arm’s-length principle for its material transfer pricing positions.

The local file focuses on information relevant to the transfer pricing analysis related to transactions taking place between connected parties (as defined in Section 33 of the Income Tax Law). Such information would include relevant financial information regarding those specific transactions, a comparability analysis, and the selection and application of the most appropriate transfer pricing method.

Who is obliged to prepare the Cypriot (Local) File?

The obligation to prepare the local file is applicable for Liable Taxpayers if their transactions with connected persons either exceed (or should have exceeded based on the arm’s-length principle) the amount of €1,000,000 in aggregate per category of transaction per tax year except financing activities for which the threshold has been increased to €5,000,000.

This means that in case a taxpayer has several transactions between connected persons but if separated per category they do not exceed €1,000,000 per year, then there is no obligation to prepare the local file.

Review of Cypriot (Local) File

The local file should be subject to Quality Assurance Review by a person who has a practicing certificate of ICPAC or any other recognized institute of certified accountants in Cyprus.

When is the deadline for preparation and submission of the Local File?

The local file must be prepared until the deadline for submission of the income tax return for the respective tax year ( e.g. 15 months after calendar year-end).

The local file is to be made available by the Liable Taxpayer at any time after the preparation deadline and submitted to the Tax Department upon request within 60 days.

When should the Local File be updated?

The local file is to be updated annually, and specific reference made to any significant changes of the market conditions that may impact the information and data included in the local file.

PENALTIES

What is the penalty for not submitting the TP documentation?

The ΤΡ documentation file is to be submitted to the Tax Department, upon request, within 60 days.

lf the ΤΡ documentation file is submitted after the 60th day, the penalties are as follows:

• If submitted between 61 and 90 days, the penalty is €5,000
• lf submitted between 91 and 120 days, the penalty is €10,000
• If not submitted or submitted after the 120th day, the penalty is €20,000

The abolishment will be effective from the year 2024 onwards.

Obligation for provisional tax payment

The following persons have an obligation to pay provisional tax, based on their expected annual taxable income for tax year 2024:

• Individuals with taxable income other than salaries, pensions, dividends and interest; and
• companies with taxable income.

Persons with no taxable income, do not have an obligation to pay provisional tax.

Payment of provisional tax

The provisional tax is calculated by applying the relevant tax rates (depending on whether the taxpayer is an individual or a company) on the expected taxable income for the year, after taking into account any overseas tax credits. It is payable in two equal instalments, as follows:

The timely payment of provisional tax can be made by firstly creating the provisional tax obligation through the Tax Portal of the Tax Department (TD) and then selecting to pay the relevant tax by credit/debit car OR online banking.

Payments made after the effective deadline will carry interest (calculated on a completed months basis) plus a 5% penalty on the tax due. An additional penalty of 5% may be imposed by the Tax Department if the tax remains unpaid two months after the statutory deadline (i.e. for the 1^st instalment, the penalty will be imposed from 1 October onwards).

Any difference between the actual tax payable and the provisional tax paid for the year 2024 is payable by 1^st of August 2025.

10% additional tax in case of underestimation

In case the provisional taxable income declared is less than 75% of the final taxable income for the year, the taxpayer is required to pay an additional tax equal to 10% of the difference between the final tax due and the provisional tax paid.

Revised provisional tax calculation

Taxpayers can revise their provisional tax calculation (upwards/downwards) until 31 December 2024. In case of an upward revision, interest is payable on the difference between the revised amount payable and the amount initially declared and paid as in the 1^st instalment.

The Cyprus Tax Department has issued Frequently Asked Questions with reference to Article 33 & Article 33C of the Income Tax Law, Κ.Δ.Π. 314/2022 and Κ.Δ.Π. 273/2022 with effect as from 1st January 2022.

You can visit the FAQs by clicking the link below:

Τμήμα Φορολογίας | Συνήθεις Ερωτήσεις (mof.gov.cy)

The current EU Blacklist includes the following countries: American Samoa, Anguilla, Antigua and Baruda, Fiji, Guam, Palau, Panama, Russia, Samoa, Trinidad & Tobago, Turks & Caicos, US Virgin Islands, and Vanuatu

The WHT are as follows:

Dividends

WHT at the rate of 17% applies on dividends paid by a Cyprus tax resident company to companies which are:

• resident in jurisdictions included in the EU Backlist, or
• incorporated/registered in a jurisdiction included in the EU Blacklist and are not tax resident in any other jurisdiction that is not included in the EU Blacklist.

The following conditions apply:

• The company receiving the dividend holds directly, either alone or jointly with associated companies, over 50% of the capital, voting rights, or is entitled to receive more than 50% of the profits in the company paying the dividends.
• The associated companies should also be resident in an EU blacklisted jurisdiction or incorporated/ registered in an EU blacklisted jurisdiction and are not tax resident in any other jurisdiction that is not included in the EU Blacklist.

The WHT does not apply in the case of dividend payments on shares listed on a recognized stock exchange.

Interest

WHT at the rate of 17% (effective from 1 January 2024 / 30% up to 31 December 2023)  applies on interest paid by a Cyprus tax resident company to companies which are:

• resident in jurisdictions included in the EU Blacklist, or
• incorporated/registered in a jurisdiction included in the EU Blacklist and are not tax resident in any other jurisdiction that is not included in the EU Blacklist.

The WHT does not apply in the case of:

• interest payments on securities listed on a recognized stock exchange.
• Interest payments made by individuals.

Royalties (Article 21 of the ITL)

WHT at the rate of 10% applies on royalties paid by a Cyprus tax resident company to companies which are:

• resident in jurisdictions included in the EU blacklist, or
• incorporated/registered in a jurisdiction included in the EU Blacklist and are not tax resident in any other jurisdiction that is not included in the EU Blacklist.

The WHT does not apply in the case of royalty payments made by individuals.

It should be noted that interest income derived from the ordinary carrying on of a business or closely connected with the ordinary carrying on of a business is not considered as interest and therefore it does not fall within the provisions of the SDC law and is therefore taxed under the Income Tax Law.

Before the application of relevant law, the reduced rate of 3% was applicable only to interest income received by Cyprus tax resident domiciled individuals only.

The beneficiaries for the digital nomad visa are non-EU or non-EEA nationals who:

• work remotely using information and communications technology
• are employed and work remotely by their own company or another company, located outside of the Republic of Cyprus or are self-employed and their customers are located outside of the Republic of Cyprus
• can prove that they have sufficient and adequate monthly income to support their living in Cyprus, of at least €3,500, after the deduction of contributions and taxes

Digital Nomads will be granted a residence permit and will benefit from:

• the right to stay in Cyprus for up to one year, with the possibility to renew for two more years.
• the beneficiaries  family members can also stay in Cyprus for the same period and be granted with a residence permit that expires at the same time as the permit of the individual. The family members, however, are not allowed to provide dependent work or to engage in any kind of economic activity in Cyprus
• In case the Digital Nomads will spend more than 183 days in Cyprus during the same calendar year, then they will be considered Cyprus tax residents. Those that spend less than 6 months but more than 60 days, may also be considered as Cyprus tax residents subject to specific criteria.

Interested parties can enter Cyprus with the use of a tourist visa and submit an application to the Civil Registry and Migration Department within three months from their arrival to Cyprus.

In case the applicant is already residing in Cyprus under a different status, and fulfills the prerequisites then, can can apply to the Civil Registry and Migration Department, to obtain the digital nomad visa.

It should be noted that the initial limit for the Digital Nomad visas are 500 applications.