CYAUSE LTD / Monday, January 26, 2026 / Categories: Cyprus Company Tax, CYPRUS PAYROLL TAXES, Cyprus Crypto Tax, Cyprus Taxation on Individuals, Articles Cyprus Tax Reform 2026 – Comprehensive Overview SUMMARY OF THE MAIN TAX CHANGES 1. Corporation Tax Rate increase: From 12.5% to 15% for profits starting 2026. Aligns Cyprus with OECD minimum 15% global tax standards, although there was no need for it (read more here). 2. Dividend Tax Rate reduced: From 17% to 5% for Cyprus-domiciled individuals. Deemed dividend tax abolished. 3. Personal Income Tax New tax-free threshold: €22,000 (up from €19,500). Progressive tax bands: Taxable Income Rate €0 – €22,000 0% €22,001 – €32,000 20% €32,001 – €42,000 25% €42,001 – €72,000 30% Above €72,000 35% Families benefit from child allowances: 1st child €1,000, 2nd €1,250, 3rd+ €1,500 per parent. Rent/mortgage up to €2,000 per parent. EV/green investments €1,000 per parent. Home insurance €500. Household income thresholds apply: up to €90k (no children), €100k (1–2 kids), €150k (3–4 kids), €200k (5+ kids). Conditions for Allowances Tax returns for spouses, civil partners, or single individuals must be filed on time. Consent required for mutual disclosure of tax information between spouses or civil partners. Definitions: Dependent children, single-parent family, family income, student — per Child Benefit Law. Single individual — lives alone, not married or in civil partnership, not cohabiting with adults or dependents. Civil partners — as per Civil Partnership Law. Detailed Salary Examples with Calculations are Provided in Appendix 1 (see below) 4. Stamp Duty Fully abolished from 1 January 2026. 5. Antiparoxi & Capital Gains Tax (CGT) a) Antiparoxi fully abolished for sellers What is antiparoxi; it is a Greek term which describes the exchange of a plot (with or without a building) to a developer to develop it. b) General ifetime Exemptions extended Lifetime Exemptions for the disposal of immovable property have been increased as shown below; General exemption €30,000 (was €17,086) Agricultural land €50,000 (was €25,629) Primary residence €150,000 (was €85,430) Example: How do these lifetime exemptions work? When an owner of immovable property disposes of its primary residency, he / she will be taxed on the profit less the lifetime exemption; i.e. 150,000 of profit. c) Property-rich shares threshold reduced from 50% to 20%. 6. Crypto-asset Taxation Flat 8% tax on gains from sale, exchange, donation, or payment. Mining acquisitions exempt. Losses offset only same-year profits. 7. Commissioner Powers Can suspend business operation and seal premises if: At least 2 tax returns or 12 monthly withholding returns are missing. Taxes exceeding €20,000 remain unpaid. Inaccurate invoices or obstruction of audit. Suspension limited to 10 days with 3 prior notifications. 8. Other Corporate Provisions Losses carry forward 7 years (from 5 years) Entertainment expenses deduction up to €30,000 (from 17,000) Cyprus companies automatically tax resident by incorporation. Directors liable for actions/omissions even after resignation. Filing deadlines: companies/audited 31 Jan (13 months post year-end); TD7 31 March. 9. Individuals / Non-Dom / Pensioners Non-Dom regime extended to 10 years; payment of a lump sum €250k per 5 years is required. The Cyprus Non Dom can now last for 27 years! Non-Doms exempt from SDC on dividends, interest, rental income. Pension special regime amended: >€5,000 taxed at 5%. Stock options under approved employer plan taxed at 8% (cap €1M over 10 years). Ex gratia payments >€200k taxed at 20% (form 0% tax) Deductible insurance premiums expanded to cover permanent/partial incapacity. Examples Dividend Income and Applicable Special Defence Tax (SDC); the dividend tax Dividend €100,000, Cyprus domiciled Before 2026: €17,000 SDC (was 17%) After 2026: €5,000 SDC (become 5%) Deemed dividend tax abolished Crypto-Asset Tax Sell crypto €50,000, cost €20,000 → gain €30,000 Before 2026: Corporate Tax 12.5% or Personal Tax up to 35%. After 2026: 8% → €2,400 tax Mining acquisitions exempt Losses offset same-year only Property Sale & Capital Gains Tax (CGT) Primary residence €200,000 gain (Selling Price less costs less indexation allowance) Capital Gains Tax at 20% (remains the same) Before 2026: €114,570 taxable → CGT payable After 2026: €50,000 taxable → reduced CGT Non-Dom & Special Defense Tax (SDT) Resident >17 years, dividends €500,000 SDC: exempt under Non-Dom 5+5 year regime In this example a person who is in the 17th year of his non domiciled can purchase additional 10 years (Euro 250k per 5 years) and pay 0% dividend tax on any profit, in our example on dividends of €500,000. SUMMARISED CHANGES IN TABLE FORMAT 1. Corporate Taxation Feature Before 2026 After 2026 Corporate Tax Rate 12.5% 15% Loss Carry-Forward 5 years 7 years Residency by Incorporation Must prove no management/control elsewhere Automatic Cyprus tax resident Entertainment Expenses Deduction €17,086 €30,000 R&D Super Deduction 120% until 2025 Extended to 2030 Filing Deadline 31 Dec next year 31 Jan second year post-tax year 2. Dividend & SDC Changes Feature Before 2026 After 2026 Deemed Dividend Tax 17% Abolished Actual Dividend SDC 17% 5% Withholding Tax to Low-Tax Jurisdictions 17% 5% Withholding Tax to Blacklist 17% 17% SDC on rental income 3% on 75% Abolished SDC Payment 2 instalments 1 instalment with tax return 3. Personal Income Tax Taxable Income (€) Rate Before 2026 Rate After 2026 0 – 19,500 0% - 0 – 22,000 - 0% 19,501 – 28,500 20% - 22,001 – 32,000 - 20% 28,501 – 36,300 25% - 32,001 – 42,000 - 25% 36,301 – 60,000 30% - 42,001 – 72,000 - 30% 60,001 35% - 72,001 - 35% Child and Family Allowances 1st child: €1,000 2nd child: €1,250 3rd+ child: €1,500 Rent/mortgage interest up to €2,000 Energy/EV upgrades up to €1,000 per parent Home insurance €500 Family income thresholds: ≤€90k no kids, €100k 1–2 kids, €150k 3–4 kids, €200k 5+ kids Detailed Salary Examples Without Children Example Salary (€) Tax Before 2026 (€) Tax After 2026 (€) Savings (€) 1 20,000 500 0 500 2 30,000 2,100 1,600 500 3 40,000 4,860 4,500 360 4 60,000 10,860 9,900 960 5 100,000 23,860 22,300 1,560 With Children / Family Deductions Example Salary (€) Family Deduction (€) Tax Before 2026 (€) Tax After 2026 (€) Savings (€) 6 70,000 2,250 (2 kids) 14,360 12,225 2,135 7 40,000 1,000 (1 child) 4,860 3,750 1,110 8 90,000 5,750 (3 kids + rent) 21,360 17,788 3,572 9 130,000 5,750 (3 kids + mortgage) 35,360 31,788 3,572 10 170,000 8,750 (5 kids + EV) 49,360 44,738 4,622 Conclusion The 2026 Cyprus Tax Reform modernises taxation while preserving incentives for businesses, investors, and individuals. With enhanced transparency, stronger enforcement, international alignment, and expanded family/social deductions, taxpayers must plan strategically to optimise benefits. The detailed examples above illustrate before-and-after scenarios across salaries, families, dividends, crypto, and property, offering practical insights for real-life application. This reform represents a comprehensive overhaul of Cyprus’ tax system, balancing revenue collection with incentives for investment, energy efficiency, R&D, and compliance modernization. Disclaimer: The information provided in this article is for general informational purposes only and should not be construed as legal or tax advice. Please consult with a professional tax advisor for advice on your specific situation. Disclaimer: The information provided in this article is for general informational purposes only and should not be construed as legal or tax advice. Please consult with a professional tax advisor for advice on your specific situation. About Us CYAUSE Audit Services is an Audit & Assurance firm with offices in Nicosia and Limassol in Cyprus regulated by the UK ICAEW, International ACCA and the Cyprus ICPAC. Our firm has extensive knowledge and experience in local tax legislations, relocation consultation, international tax planning solutions and licensing of investment firms, funds and insurance agents / brokers. Our routine day to day services include accounting, audit, tax and advisory services to international businesses interested in relocating or establishing presence to Cyprus. 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Learn More about Cyprus Corporate Environment Information about CYAUSE Audit Services and the Cyprus Corporate & Tax System can be obtained from our Website and our YouTube channel which provides valuable information about the Corporate & Tax Environment of Cyprus Appendix 1 Cyprus Tax Reform 2026 – Family & Allowances Detailed Examples Family Tax Allowances – Key Details Child allowances (per parent): 1st child: €1,000 2nd child: €1,250 3rd & additional: €1,500 Rent/mortgage interest deduction (primary residence): €2,000 max per parent “Green” investments (EV purchase/home energy upgrades): €1,000 per parent Home insurance (natural disasters, partial/permanent incapacity): €500 Household combined income thresholds for allowances: Up to €90,000: no children Up to €100,000: 1–2 children Up to €150,000: 3–4 children Up to €200,000: 5+ children Step-by-Step Family Tax Examples All examples assume married couples filing jointly, Cyprus tax residents, and progressive tax bands. 2026 Tax Bands Taxable Income Rate 0 – €22,000 0% €22,001 – €32,000 20% €32,001 – €42,000 25% €42,001 – €72,000 30% Above €72,000 35% Before 2026 Tax Bands: Taxable Income Rate 0 – €19,500 0% €19,501 – €28,500 20% €28,501 – €36,300 25% €36,301 – €60,000 30% Above €60,000 35% Example 1: Two Kids – Combined Income €70,000 Child allowances: €1,000 + €1,250 = €2,250 Rent/mortgage: none Before 2026 Taxable income = €70,000 Break down: €0–€19,500 → 0% → €0 €19,501–€28,500 → €9,000 × 20% = €1,800 €28,501–€36,300 → €7,800 × 25% = €1,950 €36,301–€60,000 → €23,700 × 30% = €7,110 €60,001–€70,000 → €10,000 × 35% = €3,500 Total tax before 2026: €1,800 + €1,950 + €7,110 + €3,500 = €14,360 After 2026 Taxable income = €70,000 – €2,250 (child deductions) = €67,750 Tax calculation: €0–€22,000 → 0% → €0 €22,001–€32,000 → €10,000 × 20% = €2,000 €32,001–€42,000 → €10,000 × 25% = €2,500 €42,001–€67,750 → €25,750 × 30% = €7,725 Total tax after 2026: €2,000 + €2,500 + €7,725 = €12,225 Annual savings: €14,360 – €12,225 = €2,135 Example 2: Single Parent – One Child – Income €40,000 Child allowance: €1,000 Before 2026 Taxable income = €40,000 Tax bands: €0–€19,500 → 0% → €0 €19,501–€28,500 → €9,000 × 20% = €1,800 €28,501–€36,300 → €7,800 × 25% = €1,950 €36,301–€40,000 → €3,700 × 30% = €1,110 Total tax before 2026: €1,800 + €1,950 + €1,110 = €4,860 After 2026 Taxable income = €40,000 – €1,000 = €39,000 Tax calculation: €0–€22,000 → 0% → €0 €22,001–€32,000 → €10,000 × 20% = €2,000 €32,001–€39,000 → €7,000 × 25% = €1,750 Total tax after 2026: €2,000 + €1,750 = €3,750 Annual savings: €1,110 Example 3: Three Kids – Combined Income €90,000 – Rent €12,000 Child allowances: €1,000 + €1,250 + €1,500 = €3,750 Rent deduction: €2,000 Total deductions: €5,750 Taxable income after deductions: €90,000 – €5,750 = €84,250 Before 2026 Taxable income = €90,000 Bands: €0–€19,500 → 0% → €0 €19,501–€28,500 → €9,000 × 20% = €1,800 €28,501–€36,300 → €7,800 × 25% = €1,950 €36,301–€60,000 → €23,700 × 30% = €7,110 €60,001–€90,000 → €30,000 × 35% = €10,500 Total tax before 2026: €1,800 + €1,950 + €7,110 + €10,500 = €21,360 After 2026 Taxable income = €84,250 Bands: €0–€22,000 → 0% → €0 €22,001–€32,000 → €10,000 × 20% = €2,000 €32,001–€42,000 → €10,000 × 25% = €2,500 €42,001–€72,000 → €30,000 × 30% = €9,000 €72,001–€84,250 → €12,250 × 35% = €4,288 Total tax after 2026: €2,000 + €2,500 + €9,000 + €4,288 = €17,788 Annual savings: €21,360 – €17,788 = €3,572 Example 4: Three Kids – Combined Income €130,000 – Mortgage Interest €15,000 Child allowance: €3,750 Mortgage deduction: €2,000 Total deductions: €5,750 Taxable income after deductions: €130,000 – €5,750 = €124,250 Before 2026 Taxable income = €130,000 Bands: €0–€19,500 → 0% → €0 €19,501–€28,500 → €9,000 × 20% = €1,800 €28,501–€36,300 → €7,800 × 25% = €1,950 €36,301–€60,000 → €23,700 × 30% = €7,110 €60,001–€130,000 → €70,000 × 35% = €24,500 Total tax before 2026: €1,800 + €1,950 + €7,110 + €24,500 = €35,360 After 2026 Taxable income = €124,250 Bands: €0–€22,000 → 0% → €0 €22,001–€32,000 → €10,000 × 20% = €2,000 €32,001–€42,000 → €10,000 × 25% = €2,500 €42,001–€72,000 → €30,000 × 30% = €9,000 €72,001–€124,250 → €52,250 × 35% = €18,288 Total tax after 2026: €2,000 + €2,500 + €9,000 + €18,288 = €31,788 Annual savings: €3,572 Example 5: Five Kids – Combined Income €170,000 – EV Purchase €1,000 Child allowances: €1,000 + €1,250 + 3×€1,500 = €7,750 EV deduction: €1,000 Total deductions: €8,750 Taxable income after deductions: €170,000 – €8,750 = €161,250 Before 2026 Taxable income = €170,000 Bands: €0–€19,500 → 0% → €0 €19,501–€28,500 → €9,000 × 20% = €1,800 €28,501–€36,300 → €7,800 × 25% = €1,950 €36,301–€60,000 → €23,700 × 30% = €7,110 €60,001–€170,000 → €110,000 × 35% = €38,500 Total tax before 2026: €1,800 + €1,950 + €7,110 + €38,500 = €49,360 After 2026 Taxable income = €161,250 Bands: €0–€22,000 → 0% → €0 €22,001–€32,000 → €10,000 × 20% = €2,000 €32,001–€42,000 → €10,000 × 25% = €2,500 €42,001–€72,000 → €30,000 × 30% = €9,000 €72,001–€161,250 → €89,250 × 35% = €31,238 Total tax after 2026: €2,000 + €2,500 + €9,000 + €31,238 = €44,738 Annual savings: €4,622 Appendix 2 Detailed Analysis of Important Provision Other Provisions Affecting Individuals Employee Bonuses and Gifts Income exceeding €200,000 under specific subparagraphs of Article 5 is taxed at 20%. Sole Traders The threshold for mandatory submission of audited accounts by an individual increases from €70,000 to €120,000 of gross income. Various Amendments Provisions for serving notifications to taxpayers are modernized, ensuring delivery by secure methods. The deadline for submission of corporate tax returns is moved to January 31 of the second year following the tax year, and this date will also apply for the payment of corporate tax. Submission of tax returns becomes mandatory for all individuals who are residents of the Republic aged 25 and above, regardless of whether they have taxable income, in order to broaden the tax base and increase tax revenue. Mandatory submission of tax returns is introduced for cooperatives. In the case of a cooperative that is an investment fund, the tax return must be submitted by the fund manager. The deadline for filing appeals to the Tax Commissioner is extended to 60 days. The Tax Commissioner is granted the authority to request a statement of assets and liabilities covering a period of eight (8) years, and taxpayers are required to keep supporting documents for their tax returns for eight (8) years after the actual submission date. Employers are obliged to submit employee declarations for all employees, regardless of income level. The powers of the Tax Department are strengthened to request tax information regardless of banking or professional confidentiality. The law introduces the ability to suspend business operations and seal business premises after a relevant decision by the Tax Commissioner, following three prior written warnings, in cases where a person operating the business repeatedly violates tax obligations, fails to issue or issues incorrect invoices/receipts, or obstructs a tax audit. Administrative fines and monetary penalties are amended to encourage voluntary compliance. Cryptocurrency Tax (Article 20E) The new tax bill has specific reference to Cryptocurrency Tax (article 20E) which does not distinguish between physical or legal person. Therefore, it is stipulated that the tax rate for both individuals and corporates is at 8% subject to conditions as indicated below: Category Provision Tax rate 8% flat on profits from disposal of crypto-assets Losses Can only offset crypto gains within same year; cannot carry forward or offset other income Disposal definition Sale, donation, exchange, or payment with crypto-assets Mining exception Profits from mined crypto are tax-exempt under general income tax Fallback Profits outside this article taxed under normal provisions (Parts III & V) Definition reference EU Regulation 2023/1114 (MiCA) Profits of any person arising from the disposal of crypto-assets shall be subject to taxation at a rate of eight percent (8%). Notwithstanding the provisions of Article 13, any losses arising from the disposal of crypto-assets may only be offset against profits from the disposal of crypto-assets realized within the same tax year. Such losses cannot be carried forward to subsequent years or offset against profits of future years of the same person. The provisions of subsections (4) to (11) of Article 13 shall not apply. For the purposes of this Article: (a) The term "crypto-assets" shall be interpreted according to paragraph 5 of subsection 1 of Article 3 of Regulation (EU) 2023/1114, whose market value is essentially represented and derived from the market value of crypto-assets. (b) The term "disposal of crypto-assets" means the sale of crypto-assets, the donation of crypto-assets, the exchange of one crypto-asset for another, and the use of a crypto-asset as a means of payment. The provisions of this Article shall not apply in cases where the crypto-assets disposed of were acquired through mining activities. Any profit arising from crypto-asset transactions that does not fall within the provisions of this Article shall be taxed according to Parts III and V of this Law. Frequently Asked Questions What will the Cyprus Crypto Tax Rate be as of 2016? Profits from selling, donating, exchanging, or spending cryptocurrency will be taxed at a flat 8% rate. How can previous or future losses can be used? Crypto losses can only offset crypto gains within the same tax year. They cannot be carried forward or used against other types of income. What is the definition of Crypto Assets? “Crypto-assets” are defined as per EU Regulation 2023/1114 (MiCA) — essentially, digital assets whose value comes from their market value. What counts as a “disposal”: Selling crypto, giving it away, swapping it for another crypto, or using it to pay for goods/services all count as “disposals” that trigger tax. I am a miner. How will I get taxed? This special crypto tax does not apply to crypto obtained through mining — those profits are taxed under the general income tax rules instead. Fallback rule: Any crypto-related profit not covered by this article is taxed under the normal provisions of Cypriot tax law (Parts III & V). Special Defense Contribution (SDC) Category Change Dividends Deemed distribution abolished; actual dividends taxed at 5% (previously 17%) Rental income SDC abolished Withholding to low-tax jurisdictions 5% SDC on dividends Interest (government/charities/etc.) Reduced to 3% Non-domicile alternative €50,000/year lump sum for 5 consecutive years, may opt for up to two 5-year periods Collective Investment Schemes From 1/1/2031, redemption gains treated as dividends for SDC purposes Anti-avoidance 10% SDC on disguised dividends; profit capitalization treated as dividends; general anti-abuse rules Fines / penalties Adjusted to encourage voluntary compliance Non-Domiciled Persons An alternative taxation method is introduced for non-domiciled individuals (Section 3D) who have completed 17 years of residence in Cyprus, allowing them to opt for a five-year (renewable for another five years) tax period by paying a lump-sum amount of €250,000 covering the entire five-year period. Who it applies to: Individuals without domicile in Cyprus who are considered to have acquired domicile in Cyprus may opt for an alternative lump-sum taxation method, paying a fixed annual special defense contribution of €50,000, regardless of their income. Binding period: The choice is irrevocable and binding for a period of five consecutive tax years. Application process: The individual must submit an application on a designated form by June 30 of the first year of the five-year period, and it must be accepted by the Tax Commissioner. Payment: The contribution is payable in one lump sum of €250,000, covering all five years, by the end of the month following acceptance of the application. If not paid on time, the alternative method does not apply, and the individual is taxed under normal rules based on income. Other rules: The lump-sum contribution cannot be offset against other taxes or credits. Payment fully satisfies all obligations for the five-year period. Payments are non-refundable, and no foreign tax credits apply. Renewal: An individual may opt for this alternative method for up to two five-year periods. Capital Gains Tax (CGT) Amendments One of the most important Capital Gains Tax (CGT) Amendments for the majority of Cypriots is the abolition of tax when a property owner (physical or legal person) exchanges their property to a developer or equivalent for further construction arrangements. This will help many Cypriot trapped property owners develop their assets and off course it will help the economy and tax funds. What is Antiparochi? As defined by the bill; “It is further provided that, for the purposes of this paragraph, the term ‘exchange’ also includes a ‘property-in-exchange arrangement’ (antiparochi), where ‘antiparochi’ means an agreement under which the owner of a plot of land transfers part of it to a contractor for the construction of a building thereon, in return for granting the owner, after the construction, ownership rights over certain units or parts of the building constructed on the portion of the land transferred to the contractor and on the portion of the land that remains in the ownership of the owner, provided that the construction of the said units or parts, as specified in the agreement, is completed within five years from the date of the agreement.” Summarised table with key Capital Gains Tax amendments Category Change Property exchanges / antiparochi Exemption applies to property received in exchange for construction arrangements (antiparochi) Definition of immovable property Shares where ≥20% of value indirectly from Cyprus property subject to CGT (down from 50%) CGT rate 20% on taxable gains (unchanged) CIS redemption gains From 1/1/2031, treated as dividend for SDC purposes Administrative powers Tax Commissioner may refuse property transfer if parties non-compliant Compliance fines / penalties Adjusted to encourage voluntary compliance Summarised Personal & Corporate Taxes Key Measures “Income Tax Laws of 2002 to (No.2) of 2025”: Category Amendment / Change Effective Date / Notes Individual Tax Rates Personal income tax brackets revised; tax-free threshold increased from €19,500 to €22,000 1/1/2026 Family Tax Relief For families below certain income thresholds: • €1,000 per child (€2,000 for single-parent families) • €1,000 per student • Up to €1,500 deduction for mortgage/rent interest on primary residence • Up to €1,000 deduction for energy upgrades or purchase of new electric vehicle 1/1/2026 Corporate Tax Rate increased from 12.5% to 15% 1/1/2026 Crypto Tax Flat 8% tax on gains from disposal of crypto; losses can offset gains within same year 1/1/2026 Loss Carry forward Period extended from 5 years to 7 years 1/1/2026 R&D and Intangible Assets 120% super deduction for R&D and intangible assets extended until 2030 1/1/2026 Entertainment Expenses Maximum deductible increased from €17,086 to €30,000 1/1/2026 Stock Exchange Registration Costs Deductible up to €300,000; unused “De Minimis” allowance can be used within 3 years 1/1/2026 Stock Options Flat 8% tax on employee stock options (up to double annual salary); max benefit €1m over 10 years 1/1/2026 Energy-Related Capital Expenditures Enhanced capital allowances for energy upgrades extended until 2030 1/1/2026 Transfer Pricing / Documentation Thresholds Exemption limits raised: • Financial transactions: €10m • Goods sales: €5m • Other transactions: €2.5m 1/1/2026 Gratuities / Termination Payments One-time payments taxed at 20%; €200,000 exemption if due to termination 1/1/2026 Insurance Premium Deductions Deductible for permanent/partial disability beyond life insurance; housing insurance deductible up to €500 1/1/2026 Agricultural / Livestock Capital Allowances 20% enhanced deduction on machinery/equipment, net of subsidies 1/1/2026 Interest Income Exempt for individuals, pension funds, government bodies; subject to special defense contribution 1/1/2026 Collective Investment Schemes (CIS) Interest income taxable, exempt from defense contribution; gains from CIS redemption considered dividend from 1/1/2031 1/1/2031 for redemption gains Foreign Service Pension Regime Tax rate increased from 5% on income >€3,420 to income >€5,000 1/1/2026 Corporate / Legal Residence Companies established/registered in Cyprus considered Cypriot tax residents 1/1/2026 Pension / Provident Funds Taxable if operating a business or owning property 1/1/2026 Subsidiary Share Interest Deductions 100% interest deduction abolished (transitional until 2027); no deduction if subsidiary in non-cooperative jurisdiction Until 2027 for investments before 31/12/2025 Permanent Establishment in Non-Cooperative Jurisdiction Profits not exempt from income tax 1/1/2026 Fines / Penalties Adjusted to encourage voluntary compliance 1/1/2026 Enforcement and Compliance Measures The suggested tax reform gives significant powers to the Tax Commissioner which could be subject to abuse. Such powers include the authority to request tax-related information regardless of banking or professional confidentiality and the authority to suspend the operation of a business and seal its premises following three mandatory written warnings, in cases where the business repeatedly fails to meet its tax obligations, issues false or no invoices/receipts, or obstructs a tax audit. In this article we provide more details on specific amendments of the tax law which enhance the ability of the Tax Commissioner to collect taxes: Suspension of Business Operations and Sealing of Premises (Article 32A) Rent Payments (Article 48A) - Obligation to Pay Rent via Bank Account 48A. Corporate Deregistration Non-Effect (Article 53A) Share Seizure (Section 9ST) Property Transfer to Settle Taxes (Section 9Z) Suspension of Business Operations and Sealing of Premises (Article 32A) Authority of the Tax Commissioner: The Tax Commissioner may suspend the operation of a business and seal its premises if the business operator: Fails to submit at least two tax returns or twelve-monthly withholding statements, or Fails to pay taxes as declared or assessed, including withholding taxes, if the total unpaid amount exceeds €20,000, or Issues inaccurate invoices or receipts, or fails to issue them, or Obstructs a tax audit by authorized officials. Duration: The suspension/sealing period cannot exceed ten (10) days. Changing the legal form of the business or the responsible person does not prevent enforcement if the business continues in the same location with the same or similar activity. Notice Requirements: Three written warnings must be sent before suspension, either via registered mail or delivered to the business premises: First warning: intention to suspend; at least 10 days for compliance. Second warning: if non-compliance continues; again at least 10 days for compliance. Third warning: final notice before enforcement (not included in the excerpt but implied). Compliance Check: After each notice period, the Tax Commissioner verifies whether the business has fulfilled its obligations. Enforcement proceeds only if obligations remain unmet. Rent Payments (Article 48A) - Obligation to Pay Rent via Bank Account 48A. Rent payments for immovable property within the Republic, where the total monthly amount is equal to or exceeds five hundred euros (€500), must be made exclusively through: (a) a bank transfer, or (b) payment by debit or credit card, or (c) any other recognized electronic payment method.” Corporate Deregistration Non-Effect (Article 53A) Regardless of the provisions of the Companies Law, when a legal entity owes any taxes, or has failed to submit tax returns for any tax year, or when an examination, audit, or investigation of its tax affairs is being conducted by the Tax Department, any change or deregistration of directors or officers of the legal entity from the register of the Registrar of Companies shall have no effect for the purposes of applying the provisions of this Law, if: the tax liabilities became due during their tenure in any of the above positions, or the failure to submit tax returns by the legal entity occurred during their tenure in any of the above positions, or they committed any offence under the provisions of this Law during their tenure in any of the above positions. Share Seizure (Section 9ST) If a person refuses, delays, or fails to pay taxes owed to the Tax Commissioner exceeding €100,000, for more than 30 calendar days after the payment is due, and provided that: The deadlines or procedures under Articles 20, 20A, and 21 of the Assessment and Collection of Taxes Law have passed or been completed, and The tax is not being paid in instalments approved under Article 40, or The tax has not been waived or written off by Cabinet decision under Articles 54 and 54A, or the process is ongoing, or Sufficient security has not been provided to the Tax Commissioner for payment, Then the Tax Commissioner may seize any property of that person in the form of shares of legal entities under the provisions of this paragraph. Property Transfer to Settle Taxes (Section 9Z) If a person fails, delays, or neglects to pay taxes or any additional amounts (including interest or penalties) exceeding €10,000, the Minister of Finance, upon the person’s application and following a proposal by the Tax Commissioner and a decision by the Council of Ministers, may accept a transfer of property to the State in settlement of these debts. The property must be free of any liens, encumbrances, or other burdens for the transfer to be accepted. I can also make a plain-language version for your blog explaining how this works for taxpayers and property owners. Key Dates and Commencement 1 January 2026: Most provisions, including personal/corporate tax, SDC, CGT amendments, and enforcement measures, become effective. 1 January 2031: Redemption gains from collective investment schemes treated as dividends for SDC purposes. 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