馃帀馃嚚馃嚲 Big News for Digital Nomads in Cyprus 鈥� 2026 Cyprus Government State Budget Approved & Major Tax Benefits Coming January 1, 2026! 馃嚚馃嚲馃帀
The Cyprus Parliament has approved the 2026 state budget, which includes a major tax reform package scheduled to take effect January 1, 2026.
This is especially important if you are a tax resident digital nomad or run a Cyprus鈥憆egistered company. Here鈥檚 what you need to know.
馃搷 FOR DIGITAL NOMADS WHO ARE TAX RESIDENTS
鉁� Higher Tax-Free Threshold
The personal income tax tax-free threshold rises from 鈧�19,500 to 鈧�20,500 per year 鈥� meaning more of your income stays untaxed.
馃挕 Potential Future Increase
There鈥檚 also discussion about potentially increasing it further to around 鈧�22,000, with cross-party talks supporting middle-income earners and families.
鉁� Expanded Deductions
Additional deductions for children, students, mortgage interest or rent, and household energy improvements or electric vehicle purchases can further increase your effective tax-free income.
鉁� Non-Dom Benefits Stay Strong
The popular non-dom regime continues, allowing eligible residents 0% tax on foreign dividends and interest, keeping Cyprus an attractive EU base for international income streams.
馃捈 FOR DIGITAL NOMADS WHO RUN CYPRUS-REGISTERED COMPANIES
鉁� Corporate Tax Rate Update
Corporate income tax rises slightly from 12.5% to 15% starting January 1, 2026 鈥� still competitive in the EU.
鉁� Simplified Dividend Rules
The deemed dividend distribution rule is abolished for profits earned after January 1, 2026, simplifying business taxation.
鉁� Lower Dividend Tax for Individuals
The Special Defence Contribution on actual dividends is reduced from 17% to 5%, meaning more profit stays in your hands.
鉁� Rental Income SDC Abolished
Rental income will no longer be subject to the special defence contribution, reducing the tax burden for property owners and companies.
鉁� Extended Loss Carry-Forward & Business Incentives
Losses can now be carried forward longer, helping startups and growing businesses. Additional incentives support R&D and capital investment, making it easier to plan long-term.
馃搮 EFFECTIVE DATE
All of these reforms 鈥� for both individuals and companies 鈥� are expected to take effect from January 1, 2026, so your 2026 tax planning should already account for them.
馃實 WHY THIS MATTERS FOR DIGITAL NOMADS
鉁� Keep more of what you earn - with the higher tax-free threshold and expanded deductions.
鉁� Non-dom benefits continue - making international income tax-efficient.
鉁� Simpler and lower business taxes - although the corporate tax rate increases slightly from 12.5% to 15%, Cyprus-registered companies enjoy lower overall taxes thanks to a simpler and more efficient business tax system.
鉁� Cyprus remains a competitive, EU-friendly base - for remote work and entrepreneurship.
馃搶 Pro Tip: If you鈥檙e a digital nomad planning to live or run a business in Cyprus, now is the perfect time to review your tax strategy and make the most of these changes before 2026.
