The Plenary of the House of Representatives has approved the tax reform, voting in favour of five of the six bills submitted by the executive branch, as revised following the amendments discussed at the Parliamentary Committee on Finance and Budget.
An urgent bill submitted by the parliamentary majority, providing for the full abolition of stamp duties, was also approved, along with a bill concerning international trusts.
Of the bills, only the Capital Gains Tax Bill was approved unanimously, while the remaining bills and amendments were approved by majority vote. Two of them were passed with negative votes from AKEL, one with negative votes from ELAM and the independent Socialist MP Costis Efstathiou, and one with the negative vote of Costis Efstathiou.
The bills were approved with a large number of amendments.
Core elements of the reform
At the heart of the reform are extensive changes to the taxation of personal and corporate income, effective from 1 January 2026, including an increase in the tax-free income threshold to €22,000, a revision and widening of tax brackets, and the introduction of a range of new tax deductions for families, housing-related expenses, rent, home energy upgrades and the purchase of electric vehicles. At the same time, the corporate income tax rate is increased to 15%.
The House also approved significant changes to the Special Defence Contribution, including the abolition of the levy on deemed dividend distributions for profits generated after 2026, a reduction of the rate to 5% for actual dividend distributions, the abolition of the levy on rental income, and the introduction of anti-abuse measures for disguised distributions. Provisions were also adopted regarding the taxation of interest, dividends and income of non-residents.
Modernisation of tax assessment and collection
Particular emphasis was placed on the modernisation of tax assessment and collection procedures. Among other measures, the submission of tax returns becomes mandatory for the vast majority of individuals and legal entities, record-keeping periods are extended, the audit and collection powers of the Tax Department are strengthened, and new mechanisms for the freezing of assets and shares in cases of large tax debts are introduced, accompanied by appropriate safeguards.
Watch the parliamentary debate below:
