Cyprus will enter a new tax era in 2026, as the implementation phase of the national tax reform introduces sweeping changes to how taxes are assessed, declared and collected. The new provisions significantly expand who must file a tax return, impose stricter obligations on businesses, mandate traceable rent payments and introduce the possibility of sealing or suspending the operation of premises for serious tax violations.
The reform applies to income earned from 1 January 2026 onwards and reshapes the obligations of both individuals and companies.
Mandatory tax returns for all residents aged 25 to 71
One of the most consequential changes concerns individuals. From the 2026 tax year, every resident of the Republic aged between 25 and 71 on 31 December of that year must submit a tax return, even if they had no taxable income.
This marks a major shift from the previous system, under which individuals earning below the tax free threshold were exempt from filing. The intention, as stated in the legal rationale, is to create a complete fiscal profile of the economically active population.
Residents aged 25 and above must also register with the Tax Department and obtain a tax identification number, even if their income is not taxable. A transitional provision gives those with no income in 2026 or 2027 until 31 December 2027 to register.
The deadline for filing personal tax returns remains 31 July of the following year.
New rules for rent payments
A major change affecting both tenants and landlords is the introduction of mandatory traceability rules for rental payments. All rent for properties within the Republic must be paid exclusively by:
- bank transfer
- debit or credit card
- any other recognised electronic means
Cash payments will be prohibited, and violations will carry criminal and administrative penalties. Offenders face fines up to 5,000 euro, imprisonment up to three years, or both.
Earlier filing, extended payment deadlines for businesses
Companies and self employed persons with audited or reviewed financial statements face two parallel changes:
- their tax return filing deadline is moved forward to 31 January
- their self assessment tax payment deadline is extended to 31 July
The aim is to speed up tax assessments while giving businesses more flexibility to manage their cash flow. The Council of Ministers may extend deadlines when necessary.
The reform abolishes the special temporary taxation formula previously applied to insurance companies. They will now follow the same rules as all other corporate entities, a change expected to improve transparency and facilitate effective tax auditing.
Sealing premises for tax violations
A major new enforcement tool allows the Tax Commissioner to suspend the operation of a business and seal its premises for serious or repeated non compliance.
This measure is not automatic. It follows a graduated procedure with written notices, deadlines for corrective action and a final opportunity for the taxpayer to respond. Only after three formal notifications and persistent non compliance can the Commissioner order a temporary shutdown of up to ten days, extendable by up to twenty days in extreme cases.
Violating a sealing order is a criminal offence punishable by up to two years imprisonment or a fine of up to 30,000 euro. The decision becomes effective once published in the Official Gazette.
Director liability clarified
Changes to company law provisions ensure that company directors remain personally responsible for acts or omissions during their tenure, even if they have since been removed from the official registry. The law also clarifies when a director’s term is considered to have ended, depending on the timing of notifications to the Registrar.
Higher turnover threshold for audited accounts
In a move welcomed by small and medium sized businesses, the turnover threshold requiring audited accounts is raised from 70,000 to 120,000 euro.
Those with turnover between 120,000 and 200,000 euro may submit reviewed rather than audited statements, provided total assets do not exceed 500,000 euro for two consecutive years.
Businesses below 120,000 euro in turnover are exempt from preparing financial statements altogether, unless specifically requested by the Tax Commissioner.
Automatic data reporting from banks and employers
Banks will be required to transmit information on any person who receives interest, including:
- full identification and tax residency details
- the amount of interest credited
- any taxes withheld
Employers must submit by the end of March a complete list of all employees, including those part time or contract staff, along with identification details, start and end dates of employment, and income paid.
This mass reporting framework is designed to strengthen tax compliance and improve the accuracy of taxpayer records.
The new rules confirm a broader shift toward a more comprehensive, traceable and enforceable tax system, aligning Cyprus with European standards while increasing transparency and compliance across the economy.