Cyprus Tax & Corporate Glossary
Plain-language definitions of the terms that come up most for clients registering, running and winding down a Cyprus company — updated for the 2026 tax reform.
Tax
Corporate tax rate
The rate of tax a Cyprus company pays on its taxable profits. It rose from 12.5% to 15% from 1 January 2026, part of a broader reform aligning Cyprus with the OECD's global minimum tax standard. It remains one of the more competitive rates in the EU.
Non-domiciled status (non-dom)
A Cyprus tax resident who is not domiciled in Cyprus under the Special Defence Contribution Law. Non-doms are exempt from Special Defence Contribution on dividends and interest, for up to 17 years of Cyprus tax residence — a key reason founders relocate here.
Special Defence Contribution (SDC)
A separate tax on certain passive income of domiciled Cyprus tax residents. From 1 January 2026, dividends are taxed at 5% (down from 17%); non-domiciled residents remain exempt entirely. Rental income no longer bears SDC as of 2026 — it's taxed only under normal income tax.
60-day tax residency rule
An individual becomes a Cyprus tax resident for the year if they spend at least 60 days in Cyprus, don't spend more than 183 days in any single other country, and maintain a permanent home plus business or employment ties in Cyprus. A common route for founders who travel frequently.
183-day tax residency rule
The standard residency test: anyone who spends more than 183 days in Cyprus in a calendar year is automatically a Cyprus tax resident for that year, regardless of ties elsewhere.
IP Box regime
A tax incentive under which 80% of qualifying profit from intellectual property is treated as a deemed deduction, so only 20% of that profit is actually taxed. At the 15% corporate rate, this brings the effective tax rate on qualifying IP income down to roughly 3%.
GESY (General Healthcare System)
Cyprus's national health system, funded through contributions on most income types. Employees currently contribute 2.65% on income up to an annual cap, and employers contribute separately through payroll.
Capital Gains Tax (CGT)
A 20% tax on gains from disposing of immovable property in Cyprus (or shares in companies that mainly own such property). Certain lifetime exemptions apply depending on the type of disposal.
Corporate
Registrar of Companies
The Cyprus government body that incorporates companies, holds the official company register, and processes annual returns, director/shareholder changes and other statutory filings.
Annual Return (HE32)
A yearly statutory filing confirming a company's directors, shareholders, registered office and share capital as they stand at the filing date. Missing this consistently is one of the most common compliance failures we see.
Registered office
The official Cyprus address a company must maintain for statutory correspondence and legal notices. It does not need to be where the business actually operates.
Company Secretary
A mandatory officer for every Cyprus company, responsible for statutory filings, maintaining the register of members and directors, and keeping company records in order.
Ultimate Beneficial Owner (UBO)
The individual(s) who ultimately own or control a company, even if that control sits behind other corporate layers. UBO details must be filed on the Cyprus Beneficial Ownership Register and kept current.
AML & Compliance
Anti-Money Laundering (AML)
The body of Cyprus and EU law requiring regulated firms — including accounting and corporate service providers — to verify who they're dealing with and monitor for signs of money laundering or terrorist financing.
Customer Due Diligence (CDD)
The process of verifying a client's identity, ownership structure and source of funds before and during a business relationship. Higher-risk clients (e.g. certain countries or PEPs) require Enhanced Due Diligence.
Politically Exposed Person (PEP)
Someone who holds, or has held, a prominent public function (e.g. senior government, judicial or military office), or their close family and associates. PEP status automatically triggers Enhanced Due Diligence under Cyprus AML rules.
Residency
Tax migration
The process of relocating an individual's tax residency to Cyprus, typically to access non-dom status and the wider tax framework — distinct from immigration status itself, though the two are usually planned together.
General information only, correct to the best of our knowledge at time of writing — it is not tax or legal advice. Rules change; always confirm how a term applies to your specific situation before relying on it.
Have a question about your situation?
These definitions are a starting point — how they apply depends on your structure, residency and plans. Book a consultation and we'll walk through it.
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