Cyprus tax reform brings revised income tax withholding from January

Cyprus’ tax reform, which took effect on January 1, 2026, is expected to deliver direct financial benefits to taxpayers through revised tax scales, according to the audit office.

The office said the changes will be applied automatically through income tax withholding, starting with the January 2026 payroll, covering state officials and employees, pensioners, as well as hourly government personnel.

However, it clarified that taxpayers with annual taxable income exceeding €22,000 must take additional action to fully benefit from the new deductions, exemptions and tax reliefs introduced under the reform.

To do so, they are required to review the explanatory tax guide, frequently asked questions and illustrative examples issued by the Tax Department, and submit the relevant declaration form.

Submitting the declaration ensures that all eligible deductions and exemptions provided under the reform are taken into account, the office said.

For active state officials and employees, the required declaration, prepared by the payroll sector of the general accounting office, must be submitted electronically to payroll@treasury.gov.cy.

Retired state officials and employees are required to complete the tax department’s declaration for claiming tax deductions (T.F.59) and submit it to accountant.general@treasury.gov.cy.

Retired government officials and employees under the new professional pension plan must also complete form T.F.59 and submit it to newpensions@treasury.gov.cy.

Hourly government personnel, meanwhile, should complete the dedicated declaration prepared by the general accounting office and submit it to hourlypaid@treasury.gov.cy.

The office noted that individuals not affected by the additional tax deductions are not required to submit any declaration.

Data entry into the relevant electronic systems will begin from February 2026, with processing carried out in order of priority.

Any resulting adjustments to income tax withholding will be applied over the remaining months of the year, based on each individual’s annual taxable income.

For further information or clarifications, interested parties are advised to contact the tax department.