The Cyprus Banking Association has highlighted four main updates in the tax reform that impact both individuals and businesses. These changes relate to banking operations, loans, rental payments, and corporate income. The reforms aim to simplify financial processes, reduce costs, and increase transparency in transactions.
1) Stamp Duty Abolished
Banks will no longer calculate or charge stamp duty on:
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new loan agreements,
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documents securing collateral (e.g., mortgages),
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other banking services and contracts.
This change will lower costs for clients and streamline the processing of transactions.
2) Mortgage Tax Benefits
A tax deduction of up to €2,000 on mortgage interest will be available for the purchase or construction of a primary residence for each spouse.
Example: If a couple pays €5,000 in mortgage interest annually, each spouse can reduce their taxable income by €2,000.
The benefit applies only to loans that are repaid on time and meet the established income criteria. Authorities are also considering extending this deduction to loans for home renovations.
3) Cashless Rental Payments
Starting January 1, 2026, paying rent for residential or commercial properties in cash will no longer be allowed, regardless of the amount. All payments must be made through banking channels, such as:
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bank transfers,
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card payments.
The goal of this measure is to increase transparency and reduce unofficial payments.
4) Elimination of Defense Tax for Companies
From January 1, 2026, companies will be exempt from the defense contribution on interest earned from bank deposits. Previously, banks automatically withheld this tax. Now, companies will receive the full interest amount.
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