What this covers
If you run a Cyprus company, two things happened at once and they are easy to confuse. The corporate income tax rate went up, and a separate global minimum tax regime came into force. They are different laws with different scope.
This guide gives you the new rate, the date it applies from, and a plain answer to the question most owners of small Cyprus companies actually have: does the global minimum tax affect me? For almost all of them the answer is no.
The rate
From 1 January 2026, Cyprus companies pay corporate income tax at 15% of taxable income. The rate that applied before was 12.5%.
| Up to and including tax year 2025 | From tax year 2026 | |
|---|---|---|
| Corporate income tax rate | 12.5% | 15% |
| In force from | 1 January 2013 | 1 January 2026 |
| Set out in | Second Schedule, paragraph 2 of the Income Tax Law N.118(I)/2002 | The same paragraph, as replaced by the Income Tax (Amending) (No. 4) Law N.244(I)/2025 |
The amending law does not phase the increase in. Section 25 of N.244(I)/2025 brings it into force on 1 January 2026, so tax year 2025 is charged at 12.5% and tax year 2026 at 15%.
Nothing else about the charge changed with the rate. It is still a flat rate on taxable income, not on accounting profit, and it applies to each euro of taxable income rather than in bands.
Worked example
A Cyprus company with taxable income of €200,000.
- Tax year 2025: €200,000 × 12.5% = €25,000
- Tax year 2026: €200,000 × 15% = €30,000
- Difference: €5,000, which is 2.5% of taxable income
The increase is 2.5 percentage points on the rate, which is a fifth more tax on the same profit. On €50,000 of taxable income the extra is €1,250. On €1,000,000 it is €25,000.
Taxable income is what is left after the deductions the Income Tax Law allows. The 2026 reform also changed several of those, so your taxable income for 2026 may not be the same figure it would have been under the old rules even if your business has not changed.
Pillar Two: who it actually applies to
Pillar Two is the OECD and EU global minimum tax. In Cyprus it is Law N.151(I)/2024, which transposes Council Directive (EU) 2022/2523. It is a completely separate law from the Income Tax Law, with its own scope test.
Section 4(1) of N.151(I)/2024 applies the law only to entities in Cyprus that are part of a multinational group or a large domestic group with annual revenue of at least €750,000,000 in the consolidated financial statements of the ultimate parent entity, in at least two of the four financial years before the year being tested.
Three things about that threshold catch people out:
- It is the group’s consolidated revenue, not your company’s turnover.
- It is measured in the ultimate parent’s consolidated accounts.
- It has to be met in at least two of the four preceding years, so a single spike in one year does not pull a group into scope.
The minimum rate under that law is 15%, defined in section 2. Where the effective rate of a group’s Cyprus entities falls below it, a top-up tax is charged. Cyprus also applies a domestic top-up tax under section 3(2), so the top-up on low-taxed Cyprus entities is collected in Cyprus rather than abroad.
Important nuance. The effective rate under Pillar Two is not your Cyprus tax bill divided by your accounting profit. The law works it out on its own definitions of qualifying income and adjusted covered taxes, set out in Parts III, VI and VII. A 15% headline corporate rate therefore does not, on its own, guarantee that an in-scope group has no top-up to pay in Cyprus. Groups in scope need this modelled properly.
Dates
Under section 61, the law applies to financial years beginning on or after 31 December 2023. The provisions relating to the UTPR, that is sections 12(1), 13, 14 and 15, apply to financial years beginning on or after 31 December 2024.
Filing, if you are in scope
The top-up tax information return is due within 15 months after the last day of the reporting financial year, under section 45(7). For the transitional year, section 57 extends this to 18 months after the last day of the reporting financial year, or 30 June 2026, whichever is later.
Separately, section 47 requires every in-scope entity in Cyprus to notify the Tax Commissioner, and the notification has to be made before those deadlines expire. The Tax Department’s route for this is a message through the Tax For All portal, under the topic “Minimum Effective Global Tax Rate, Pillar II”, with the relevant form attached.
Small Cyprus company against a large multinational group
| A small Cyprus company | A Cyprus entity in a group over €750m | |
|---|---|---|
| Corporate income tax rate | 15% from 2026 | 15% from 2026 |
| In scope of N.151(I)/2024 | No | Yes |
| Top-up tax possible | No | Yes, if the effective rate falls below 15% |
| Pillar Two notification | No | Yes, under section 47 |
| Top-up tax information return | No | Yes, 15 months after the year end |
| What changed for you in 2026 | The rate, and some deductions | The rate, plus a full compliance regime |
If your company is not part of a group whose ultimate parent consolidates at least €750 million of revenue, the whole of the second column is irrelevant to you. The only 2026 change you need to act on is the rate and the deduction changes.
What commonly goes wrong
Assuming Pillar Two applies because the number 15% appears in both. It is a coincidence of design, not a link. The corporate rate is in the Income Tax Law, the minimum tax is in N.151(I)/2024, and an ordinary Cyprus company is charged under the first and is outside the second entirely.
Reading the €750 million test as your own revenue. It is the consolidated revenue in the ultimate parent’s accounts. A Cyprus subsidiary with €400,000 of turnover is in scope if its group is over the threshold, and a Cyprus company with €40 million of turnover and no group above it is not.
Applying 15% to accounting profit. The charge is on taxable income after the deductions and disallowances in the Income Tax Law. Those rules changed in 2026 as well, so recomputing last year’s taxable income at the new rate will give you the wrong number.
Assuming foreign top-up tax can be credited in Cyprus. N.244(I)/2025 added a new subsection (11) to Article 35 of the Income Tax Law which does not allow relief for top-up tax imposed outside Cyprus under a qualified IIR or UTPR. Relief for that runs through the mechanism in N.151(I)/2024 instead.
Waiting to be contacted about the Pillar Two notification. Section 47 puts the obligation on the entity, not on the Tax Department, and there is an administrative fine for missing it.
Treating K.D.P. 272/2026 as a new obligation. It is not. The decree of 26 June 2026 designates further OECD documents, including the January 2025 administrative guidance, the GloBE Information Return, the consolidated commentary and the January 2026 safe harbour package, as interpretive material for the law. It creates no new registration or filing duty.
Where to check
The Tax Department publishes the consolidated Income Tax Law and every amending law, including N.244(I)/2025, on its direct taxation legislation page, and keeps a separate Pillar II section with the notification, return and payment user guides. Both are linked as sources above.
Note that most of this material is published in Greek only. The EU directive on EUR-Lex is the one English text that covers the Pillar Two scope rules, and Cyprus transposed it without changing the €750 million threshold.
If you think your group might be near the threshold, or you need the 2026 deduction changes applied to your accounts, have it confirmed by a firm licensed to advise in Cyprus.
