1. Taxation of Provident & Pension Funds Funds tax-exempt for 20+ years; no EU pressure to change. 29 of 36 OECD countries don't tax fund returns. Unfair to employees, civil servants, and lower-income earners. Hurts long-term savings and Cyprus's fund industry competitiveness.

2. Corporation Tax Increase (12.5% → 15%) Justified as offsetting SDC dividend reduction (17% → 5%), but the OECD Pillar Two argument is misapplied — Pillar Two only affects MNEs with €750M+ revenue (<2% of Cyprus companies). Frequent rate changes undermine Cyprus's stability as an international financial centre.

3. Excessive Tax Commissioner Powers Proposed powers (suspending operations, seizing shares, blocking property transfers) bypass court oversight. Risks legal uncertainty and damages Cyprus's prestige. Better solution: faster, more efficient courts.

Bottom line: Reform is generally a positive step, but these 3 areas need reconsideration to preserve Cyprus's competitiveness as an international financial centre.

A Cyprus International Trust (CIT), governed by the Cyprus International Trusts Law of 1992, allows a settlor to transfer assets to a trustee for the benefit of chosen beneficiaries. To qualify, the settlor and beneficiaries must be non-Cyprus residents in the year preceding the trust's establishment, and at least one trustee must be a Cyprus resident throughout its duration.

The structure offers two standout advantages: robust asset protection (shielded from creditor claims, bankruptcy, and legal disputes, with a strict 2-year challenge window) and significant tax efficiency (foreign-sourced income is not taxed in Cyprus for non-resident beneficiaries, plus no inheritance or estate tax). Settlors can also retain meaningful powers, including the ability to revoke the trust, appoint/remove trustees, and direct distributions.

A CIT is an attractive vehicle for international families seeking secure, private, and tax-friendly cross-generational wealth planning.

The 2026 Cyprus Tax Reform marks a significant shift toward global compliance and modernization. Key updates include an increase in the corporate tax rate to 15% and a new residency test based on incorporation. The reform introduces a highly competitive 8% flat tax on crypto-assets and a reduced 5% SDC on dividends for residents. To bolster innovation, the IP Box regime offers an effective rate of 3%, while stricter transfer pricing thresholds and anti-avoidance rules (GAAR) ensure transparency. Real estate taxation is also tightened, applying Capital Gains Tax when 20% of a company's value comes from Cyprus property.

• Residency & Rates: Moving to a 15% Corporate Tax and incorporation-based residency.

• The Innovation Edge: Choosing between 3% IP Box gains or 120% R&D super-deductions.

• Digital Assets & Dividends: Implementation of the 8% crypto tax and 5% dividend SDC.

• Compliance & Anti-Avoidance: Lowered thresholds for transfer pricing and stricter property tax rules.

Since 2004, Cyprus has evolved into a premier destination for High-Net-Worth Individuals (HNWIs) and global entrepreneurs seeking a stable, common-law jurisdiction that balances high-tier lifestyle with aggressive tax efficiency. As the island moves toward its significant 2026 tax reform, understanding the current exemptions and upcoming changes is vital for any strategic relocation or investment plan. This summary outlines the core fiscal pillars that make Cyprus one of the most competitive relocation hubs in the European Union.