As part of the 2026 Tax Reform, effective from 1 January 2026, the Article 13 of the Income Tax legislation has been amended to allow for entities to utilize taxable losses for a longer period of time.
What’s changed
As of 1 January 2026, taxable losses can be carried forward for seven years.
For example, in tax year 2026, taxable losses of the previous seven years can be utilized i.e. the unutilized taxable losses from 2025, 2024, 2023, 2022, 2021, 2020, 2019.
Up to and including tax year 2025, only taxable losses of the previous five years could be utilized. For example, in tax year 2025, unutilized taxable losses of the previous five years 2024, 2023, 2022, 2021 and 2020 can be utilized.
What remains unchanged
Group relief
Cyprus tax resident companies can surrender their taxable losses to other group companies tax resident in Cyprus, provided they are members of the same group for the whole year (a newly incorporated company directly within the group is considered group company for the whole year).
A group company which is tax resident in another EU Member State can also surrender its taxable losses to another group member company tax resident in Cyprus, provided the surrendering company has exhausted all the means of surrendering or carrying forward the losses in the member state of residence or another member state where an intermediary holding Company may reside.
It is noted that only current-year taxable losses can be surrendered.
It is noted that before accepting taxable losses from another group company, a company first utilises any own carried-forward losses against its current-year taxable profits.
For the purposes of group relief, two or more companies will generally be regarded as members of the same group when the one Company holds at least 75% (directly or indirectly) of the voting shares of the other company or the voting of share of both companies are held at least by 75% (directly or indirectly) by a third Company. The legislation sets out additional conditions and specific rules for determining whether the 75% group relationship exists, which should be considered when assessing eligibility for group relief.
