Cyprus provisional tax explained: the two instalments and the 75% rule
Twice a year — end of July, end of December — your Cyprus company is expected to pay income tax on profit it hasn’t finished earning yet. That’s provisional tax (the law calls it “temporary tax”), and it’s the deadline most likely to arrive as a surprise email from your accountant: “please confirm your estimate and arrange payment by Friday.”
The mechanism is simple once you’ve seen it whole. It’s also one of the few Cyprus tax deadlines with a genuine decision attached — your estimate is a bet, and getting it badly wrong has a price. Here’s how it works in 2026.
How the system works
Cyprus doesn’t wait until your accounts are audited to collect corporate income tax. During the tax year itself, every company expecting taxable profit must estimate that profit, calculate the tax on it — 15% from tax year 2026, up from 12.5% — and pay it in two equal instalments: by 31 July and by 31 December.
The final reckoning comes later: after year-end, the actual tax is computed and the balance is settled by self-assessment (for 2026 profits, the reform moved this settlement to 31 January 2028, together with the TD4 return). Provisional tax paid during the year is credited against that final bill.
If the company genuinely expects no taxable profit — a loss-making year, a dormant company — no provisional tax declaration is required. That’s a legitimate nil position, not an omission. The judgment call only matters when there is profit coming.
The 75% rule — where the real money is
The estimate isn’t a formality, because of one rule: if your provisional estimate turns out to be less than 75% of the company’s final taxable income, a 10% additional charge applies — calculated on the difference between the tax finally due and the provisional tax you actually paid.
A concrete example, at the 2026 rate:
- You estimate €40,000 of profit and pay €6,000 provisional tax (two instalments of €3,000).
- The year goes better than planned: final taxable profit is €80,000, tax due €12,000.
- Your estimate (€40,000) was only 50% of the final figure — below the 75% line. The 10% surcharge applies to the €6,000 gap: €600 extra, on top of the balance itself.
- Had you revised your estimate to €62,000 (77.5%) before 31 December, the surcharge would have been zero.
The surcharge rarely comes from bad math — it comes from nobody looking. The estimate gets set in July from last year’s numbers, the second half of the year outperforms, and nobody revisits the figure before the 31 December revision deadline. If your books are current in Q4, the fix is a ten-minute check.
Revising the estimate
You can revise the estimate upward or downward at any point until 31 December of the tax year. Revising upward means topping up the difference on the first instalment, with interest on the underpaid portion (the official rate is 3.5% for 2026). Revising downward frees cash — useful in a soft year — but revise honestly: an aggressive downward revision that undershoots the 75% line brings the surcharge right back.
Paying it, in practice
Direct taxes haven’t moved to the new Tax For All portal yet — that migration is now slated for 2027. In 2026 the sequence is: the estimate is declared through TAXISnet (the temporary-tax declaration, TD.5 for companies), which generates a payment reference, and payment goes through the Tax Portal or JCCsmart. Miss an instalment date and interest accrues per completed month, plus a 5% penalty on the unpaid tax.
One nuance worth knowing: the two instalments are meant to be equal halves of the estimated tax. If you set the estimate at the last minute in December, you’re effectively paying both halves late-ish — the first instalment was due 31 July, and interest runs from there.
The three dates that matter
| Date | What happens |
|---|---|
| 31 July | First instalment: half the estimated tax on current-year profit |
| 31 December | Second instalment — and the last day to revise the estimate up or down |
| After year-end | Final self-assessment settles the balance (1 August of the following year for tax years up to 2025; 31 January of the second following year from tax year 2026) |
Monolog puts both instalments on your compliance calendar with reminders at 60, 30, 14 and 7 days — and because your books live in the same place, checking whether your July estimate still holds in November takes minutes, not an email thread with your provider.
Frequently asked questions
When is Cyprus provisional tax due in 2026?
In two equal instalments: 31 July 2026 and 31 December 2026. The estimate can be revised upward or downward until 31 December 2026.
What happens if my provisional tax estimate is too low?
If the estimate ends up below 75% of the company's final taxable income, a 10% additional charge applies on the difference between the final tax due and the provisional tax paid. Revising the estimate before 31 December avoids it.
Does a loss-making or dormant company need to pay provisional tax?
No. If the company genuinely expects no taxable profit for the year, no provisional tax declaration or payment is required. If profit materialises unexpectedly, revise before 31 December.
What rate is provisional tax calculated at in 2026?
15% of estimated taxable profit — the new corporate income tax rate that applies from tax year 2026 (it was 12.5% through tax year 2025).
How do I actually pay provisional tax?
In 2026, the declaration is made through TAXISnet and payment goes through the government Tax Portal or JCCsmart — direct taxes haven't moved to the Tax For All portal yet. Late instalments accrue interest (3.5% a year in 2026) plus a 5% penalty on unpaid tax.
Sources & further reading
This guide is general information, not tax or legal advice. Rules, rates, and deadlines change — the facts here were last verified in July 2026. Confirm anything that matters for your company with a licensed Cyprus advisor before acting on it.