Cyprus Year-End Tax Checklist for Companies

Four things to deal with before 31 December 2026, with the numbers that show why they matter.

The first year-end under Cyprus’s 2026 tax reform has one awkward feature: two sets of rules apply at once. Profits earned in 2026 follow the new regime. Profits from 2024 and 2025 still follow the old one, and one of its charges falls due on 31 December.

Four things are worth dealing with before the year closes. Each can still change the outcome today. After 31 December, most of them cannot.

Key dates

DATE	WHAT HAPPENS
31 Dec 2026	Last day to revise the 2026 provisional tax estimate. Second instalment due. 70% of after-tax 2024 profit deemed distributed.
31 Jan 2027	A 5% penalty applies to any December instalment still unpaid
31 Dec 2027	70% of after-tax 2025 profit deemed distributed
31 Jan 2028	2026 corporate tax return and final balancing payment due
31 Dec 2031	Last date to receive dividends from pre-2026 profits at 17%

01   Revise your provisional tax estimate

Provisional tax for 2026 is paid in two equal instalments, on 31 July and 31 December, based on the company’s own estimate of taxable profit for the year. The estimate can be revised until 31 December. It matters more than usual this year, because 2026 is the first year taxed at 15%. An estimate rolled forward from 2025 can understate the tax even if profit has not changed.

The rule to watch is the 75% test. If the estimate turns out to be less than 75% of final taxable profit, an extra 10% is charged on the difference between the final tax and the provisional tax paid.

WORKED EXAMPLE

A company estimated 2026 taxable profit at €200,000 and is paying provisional tax of €30,000. The year closes at €300,000.

75% of €300,000 is €225,000, so the estimate falls short and the 10% charge applies. Final tax is €45,000; less the €30,000 paid, the gap is €15,000. The charge is €1,500, on top of the tax itself.

Revising the estimate to €240,000 before 31 December avoids it. The extra tax is €6,000, of which €3,000 relates to the July instalment and carries interest from 31 July. At any normal interest rate, that costs a small fraction of €1,500.

The second instalment is due by 31 December. If it is still unpaid at the end of January, a 5% penalty is added to the unpaid amount.

ACTION  Re-run the 2026 forecast on eleven months of actual figures, and revise the estimate if it is below 75% of the likely result.

02   Settle the 2024 deemed distribution

The reform abolished deemed dividend distribution for profits earned from 2026, but not for earlier years. On 31 December 2026, 70% of a company’s after-tax 2024 profit is treated as distributed, less any dividends already paid out of it, and charged Special Defence Contribution (SDC) at 17%. The charge applies where the shareholders are Cyprus tax resident and domiciled.

WORKED EXAMPLE

A company made €150,000 of after-tax profit in 2024 and has already paid €40,000 of dividends from it. Its shareholders are Cyprus tax resident and domiciled.

70% of €150,000 is €105,000. Less the €40,000 already paid, €65,000 is deemed distributed on 31 December, and SDC at 17% is €11,050. The 2.65% General Healthcare System contribution may also apply, subject to the annual ceiling.

Paying a €65,000 dividend before 31 December produces the same €11,050. The tax does not change. What changes is that the shareholders receive the cash to pay it.

We go through the options in Cyprus Dividend Tax 2026: Distribute or Retain Profits? The same mechanism applies to 2025 profits on 31 December 2027.

ACTION  Confirm the 2024 after-tax profit and the dividends already paid from it, and decide before 31 December whether to pay out.

03   Record profits by the year they were earned

The year in which a profit was earned now decides what its distribution costs. For Cyprus tax resident and domiciled shareholders, dividends from profits earned up to 2025 are taxed at 17% if received by 31 December 2031. Dividends from 2026 profits are taxed at 5%. The 2.65% General Healthcare System contribution applies to both, subject to the ceiling.

On a €100,000 dividend, that is the difference between €17,000 and €5,000 of SDC, depending only on which year’s profits it is paid from. How mixed distributions will be allocated has not yet been tested, so a clear paper trail is the safest position.

ACTION  Close 2026 with a schedule of retained earnings split by year, and make every future dividend resolution name the profit year.

04   Review private use of company assets

From 2026, a shareholder’s private use of company assets can be treated as a disguised dividend and charged at 10%. So can the sale of company assets to a shareholder or related person below market value. The charge does not apply to non-domiciled shareholders.

This is the change most likely to catch owner-managed companies by surprise, because the arrangements involved are often informal and long-standing: the company car used at weekends, or the flat the company owns and the family uses.

ACTION  List the assets used privately and the terms of use. Where use is genuinely private, put a market rent in place or move the asset out at a proper valuation.

ALSO WORTH KNOWING

An earlier corporate return. From tax year 2026, the return and the final balancing payment are due by 31 January of the second year after the tax year. For 2026, that is 31 January 2028, two months earlier than the old 31 March deadline for the return, so the 2026 accounts need to be closed and audited sooner.

Company residence. A company incorporated in Cyprus is now resident here by default unless a tax treaty says otherwise.

Losses and entertainment. Tax losses can now be carried forward for seven years instead of five, and deductible entertainment expenses are capped at €30,000 a year.

Personal returns. The 2025 personal income tax return is due by 30 November 2026.

If you only do one thing

Make it the provisional tax review. It takes an afternoon with the management accounts, and it is the item on this list most likely to cost money if it is left alone.

If you would like a second view of your company’s position before 31 December, our tax advisory team can help.