Cyprus Provisional (Temporary) Tax 2026: Deadlines, the 75% Rule and the 10% Surcharge

Provisional tax is where most Cyprus company owners first meet the self-assessment system — and where an honest but low estimate can quietly turn into a 10% penalty. In 2026 the mechanics are unchanged in shape but sit on a reformed 15% corporate rate, so the arithmetic of the estimate matters more than it used to. This guide sets out the deadlines, the calculation, the 75% rule and the interest that attaches when things slip.Assessment and Collection of Taxes Law N.4/1978, s.24

Provisional tax is governed by the Assessment and Collection of Taxes Law of 1978, which requires taxpayers with income not fully taxed at source to estimate their taxable income for the current year and pay the resulting tax in instalments. The final liability is settled later through the self-assessment return, so provisional tax is best thought of as a deposit on account — not a separate tax.Assessment and Collection of Taxes Law N.4/1978

What is Cyprus provisional (temporary) tax?

Provisional tax — often called "temporary tax" — is an advance payment towards the income tax you expect to owe for the current tax year, calculated on your own estimate of taxable income and paid in two equal instalments during that same year.

The logic is cash-flow parity: rather than the Republic waiting until your audited accounts and final return are ready (which can be well into the following year), it collects tax as the profit is being earned. You declare an estimate, pay tax on it in two tranches, and then reconcile to the real number through the final self-assessment. For a company, the rate applied to that estimate is the reformed corporate income tax rate of 15% for tax years starting on or after 1 January 2026.Income Tax Law N.118(I)/2002, as amended by the 2026 tax reformIndividuals apply the personal income-tax bands instead, so someone with untaxed self-employment or rental income estimates the tax due after the first €22,000 tax-free band.

Who has to pay provisional tax in 2026?

Any person — company or individual — who expects to have taxable income in 2026 that is not fully taxed at source must pay provisional tax. Employees whose salary runs through PAYE have no provisional obligation on that salary; companies, the self-employed, and anyone with rents, trading or foreign income typically do.

• Companieswith expected taxable profit for the year — the most common payer, applying the 15% corporate rate to the estimate. See our Cyprus corporate tax guide for how the taxable base is built.
• Self-employed individuals and partners whose profits are not subject to withholding.
• Individuals with untaxed income— rents, overseas income, or trading gains — above the personal tax-free threshold.
• Not liable: a company or person who genuinely expects no taxable income for the year owes no provisional tax and simply files a nil estimate (or pays nothing).

Note that provisional tax covers income tax on profits only. It is separate from other levies such as the General Healthcare System (GESY) contributions, and it does not capture the mandatory 8% tax on crypto disposals, which follows its own rules.Income Tax Law N.118(I)/2002, Art. 20E (crypto disposals)

When are the two instalments due?

Provisional tax for 2026 is paid in two equal instalments: the first by 31 July 2026 and the second by 31 December 2026. Each is half of the total estimated tax for the year.

Payment is made through the Tax Department's online systems — the Tax Portal / Tax For All — against the taxpayer's account, rather than by submitting a paper estimate in advance. There is a short grace window: an instalment paid by the end of the month following its due date avoids the 5% late-payment penalty, though interest still runs from the statutory date.Cyprus Tax Department — online tax services

How do I calculate the amount?

Estimate your taxable income for the whole of 2026, apply the relevant rate — 15% for a company, the personal bands for an individual — and split the resulting tax into two equal instalments.

A worked company example makes the arithmetic concrete. Suppose a Cyprus trading company expects €200,000 of taxable profit for 2026. At the 15% corporate rate the estimated tax is €30,000. That is paid as €15,000 by 31 July 2026 and €15,000 by 31 December 2026. If the company later finds profit is running higher, it revises the December instalment upward (see below) to keep its estimate at or above the 75% line and avoid the surcharge. The estimate should be built from management accounts, not guesswork — the same numbers that will feed the year-end audited or reviewed financial statements.

Individuals apply the 2026 personal income-tax bands to their estimated taxable income: nil up to €22,000, then 20%, 25%, 30% and a top rate of 35% above €72,000. Only income not already taxed at source needs to be captured in the estimate.Income Tax Law N.118(I)/2002 (personal income-tax bands, 2026)

What is the 75% rule and the 10% surcharge?

If your provisional (estimated) taxable income turns out to be less than 75% of your final taxable income for the year, the Tax Department adds a 10% charge on the difference between the final tax and the provisional tax you actually paid.

This is the single most important number in the whole regime. The test is applied after the year closes, when the final taxable income is known from the self-assessment return. If your estimate was at least 75% of the real figure, no surcharge arises — you simply pay the balance. If it fell below 75%, the shortfall in tax is loaded with an extra 10%.Assessment and Collection of Taxes Law N.4/1978, s.26

Because over-estimating carries no penalty (the excess is simply returned), the safe planning posture when profits are uncertain is to aim slightly high rather than low. Practitioners generally target the estimate at 80–90% of realistic expected profit to leave a buffer above the 75% floor.

Can I revise my estimate during the year?

Yes. You may revise the estimate up or down at any time up to 31 December of the tax year. Revising upward before the second instalment is the standard way to stay above the 75% line when profits run ahead of plan.

A revision recalculates the total estimated tax and, with it, both instalments. If you revise upward after paying the first instalment on a lower figure, the extra tax attributable to the first instalment becomes payable and carries interest from the original 31 July due date — the revision does not erase the timing. A downward revision is equally permitted where the year has turned out worse than expected, reducing the December instalment. The practical discipline is to review the estimate against management accounts in the autumn, before the December deadline closes the window.Assessment and Collection of Taxes Law N.4/1978, s.24 (revised estimate)

What are the interest and late-payment penalties?

An instalment not paid by the end of the month following its due date attracts public (default) interest set annually by the Ministry of Finance, plus a one-off 5% penalty on the unpaid amount. Separately, the 75% rule can add its 10% surcharge on the final assessment.

• Default interest: charged on overdue tax at the public interest rate fixed each year by Ministerial decree. The rate has moved in recent years, so confirm the current figure with the Tax Department rather than assuming a fixed number.Cyprus Tax Department — Default Interest
• 5% late-payment penalty: a one-off monetary charge on an instalment still unpaid after the end of the month following the due date (so after 31 August for the July instalment, after 31 January for the December instalment).
• 10% under-estimation surcharge:the 75% rule, assessed after year-end on the difference between final and provisional tax — independent of whether the instalments themselves were paid on time.

How does the final self-assessment work?

After the year closes, the final tax is computed from the audited or reviewed accounts and declared on the self-assessment return. The two provisional instalments are set off against it; any balance is paid and any overpayment is refunded or credited.

For companies, the self-assessment balance for a tax year is due by 1 August of the following year, and the corporate tax return itself follows on the statutory filing deadline. The chain therefore runs: estimate and pay provisionally during 2026 → close and audit the accounts → self-assess and settle the balance in 2027. Because the final figure depends on audited or reviewed financial statements, a company that skips its audit cannot properly finalise its tax position — which is why the two obligations are usually handled together. The wider set of dates is laid out in our complete Cyprus tax guide.Assessment and Collection of Taxes Law N.4/1978 (self-assessment)

Common provisional-tax mistakes to avoid

The recurring errors are estimating too low to save cash, forgetting to revise when profit accelerates, and treating the December instalment as the last word instead of reconciling to the final return.

1. Lowballing the estimate. A deliberately low figure saves cash mid-year but triggers the 10% surcharge if it lands below 75% of the real result. The saving is illusory.
2. Not revising in Q4. If trading beats plan, the window to revise upward and protect the 75% position closes on 31 December. A quick autumn review of management accounts is the fix.
3. Missing the month-end grace.The 5% penalty bites only after the end of the month following the due date — but interest runs from the statutory date regardless, so "nearly on time" still costs.
4. Ignoring the final settlement. Provisional tax is on account; the balance and any surcharge crystallise on self-assessment. Budget for it.