Cyprus provisional tax is a two-instalment prepayment of corporation tax (IS) due 31 July and 31 December of the current tax year. Since 1 January 2026, the corporation tax rate increased to 15% (from 12.5%). If you budgeted using the old rate, recalculate now. The key risk is underestimating: if the taxable income you declare is less than 75% of your final taxable income, an additional tax of 10% is charged on the difference between the final tax and what you already paid.
Cyprus provisional tax is paid in two equal instalments, 31 July and 31 December. You self-assess it on your own estimate of the CURRENT year's taxable profit at 15%, not on last year's tax bill. If the taxable income you declare turns out to be less than 75% of the final figure, an additional tax of 10% is charged on the difference between the final tax and the provisional tax you paid.
What Is Provisional Tax?
Provisional tax is Cyprus's mechanism for collecting corporation tax in advance. Instead of paying all your company's tax at the end of the year when the final accounts are prepared, you pay two instalments during the year based on an estimate of your expected profit.
The system is self-assessed: you decide what you expect to earn, calculate 15% of that, and split it into two equal payments. The Tax Department does not tell you how much to pay — you estimate it yourself.
Key facts:
- Rate since 1 January 2026: 15%
- Previous rate (pre-2026): 12.5%
- Two equal instalments: 50% + 50%
- Instalment 1 deadline: 31 July
- Instalment 2 deadline: 31 December
- Form: TD5 on TAXISnet (migration to TFA ongoing)
How to Calculate Provisional Tax: Step by Step
Step 1 — Estimate Your Annual Revenue
Based on contracts in hand, recurring clients, and expected new business, estimate your company's total revenue for the full calendar year.
Step 2 — Estimate Your Deductible Expenses
Subtract your expected allowable business expenses: accountant fees, software subscriptions, office costs, travel, marketing, salaries, and any other deductible costs. See our deductible expenses guide for the full list.
Step 3 — Calculate Estimated Taxable Profit
Revenue estimate minus expenses estimate = estimated taxable profit.
Step 4 — Apply the 15% Rate
Estimated taxable profit × 15% = estimated corporation tax for the year.
Step 5 — Split Into Two Instalments
Estimated annual tax ÷ 2 = each instalment.
Worked Example: FY2026 Provisional Tax
Scenario: A consulting company expects €60,000 revenue and €15,000 expenses in 2026.
| Calculation | Amount |
|---|---|
| Estimated revenue | €60,000 |
| Estimated deductible expenses | €15,000 |
| Estimated taxable profit | €45,000 |
| Corporation tax at 15% | €6,750 |
| First instalment (31 July 2026) | €3,375 |
| Second instalment (31 December 2026) | €3,375 |
If the actual profit for FY2026 turns out to be €50,000:
- Actual tax = €50,000 × 15% = €7,500
- Already paid = €6,750
- Balance due at final assessment = €750
No additional tax applies: the declared €45,000 is 90% of the actual €50,000, comfortably above the 75% threshold.
The 75% Rule: When the Additional Tax Applies
The threshold: the taxable income you declare for provisional tax must be at least 75% of the taxable income finally determined for that year. Fall below it and an additional tax is charged automatically.
The additional tax: 10% of the difference between the final tax and the provisional tax you paid. Note the base carefully, because it is commonly misstated: the 10% applies to the shortfall, not to the whole final tax bill.
Interest runs separately on anything paid late, at the official rate set each year by the Minister of Finance. For amounts due from 1 January 2026 that rate is 3.5% a year (it was 5.5% for 2025 and 5% for 2024, so do not reuse an older figure).
Worked example:
- Actual profit: €100,000 → final tax = €15,000
- You declared: €60,000 profit → provisional tax paid = €9,000
- €60,000 is 60% of €100,000, below the 75% threshold
- Difference between final and provisional tax: €15,000 less €9,000 = €6,000
- Additional tax: 10% × €6,000 = €600, plus interest on the late amount
How to stay above the threshold: your declared taxable income must be at least 75% of the final figure. If you declare €15,000 of profit and pay €2,250, but the year closes at €40,000 of profit (final tax €6,000), you are at 37.5% and the additional tax applies.
Revising Your Estimate Before 31 December
You can revise your provisional tax estimate at any point before 31 December. This is the safety valve: if your company performs better than expected, increase the estimate and top up the payment before the second instalment deadline.
To revise:
- Go to TAXISnet and find your TD5 submission
- Submit a revised TD5 with the updated estimate
- Pay any additional amount before 31 December
There is no penalty for revising upward. The revision replaces your original estimate. If you realise in November that your profits will be significantly higher than estimated, revising before 31 December keeps you above the 75% threshold.
What If I Expect a Loss or Zero Profit?
If you genuinely expect no profit for the year, submit a TD5 with a €0 estimate. You still must submit the declaration — not submitting at all triggers a separate penalty.
If you are uncertain whether you will be profitable, err slightly on the side of a higher estimate. The cost of overpaying (you get a credit against future tax or a refund after the final assessment) is usually far smaller than the 10% additional tax for underestimating.
How to File and Pay Provisional Tax
Filing the TD5
Current portal: TAXISnet at taxisnet.mof.gov.cy (migration to TFA in progress — verify with your accountant)
- Log in to TAXISnet with company credentials
- Navigate to "Declarations" → "TD5 Provisional Tax"
- Enter the financial year and estimated taxable income
- Submit the declaration
- Note the PRN (Payment Reference Number) generated
Making the Payment
With the PRN, pay via:
- JCCSmart at jccsmart.com → "Tax Payments" → enter PRN
- Tax Portal at taxportal.mof.gov.cy → "Direct Tax Payment"
- Bank transfer using the PRN as the payment reference
Provisional Tax vs. Final Tax: The Timeline
| Event | When |
|---|---|
| First provisional tax instalment | 31 July (current year) |
| Second provisional tax instalment | 31 December (current year) |
| Year-end; prepare documents for auditor | January (following year) |
| Auditor completes accounts | February–March (following year) |
| Company tax return TD4 filed | 31 March (second following year) |
| Any balance of tax paid | With TD4 filing |
The provisional tax payments made in July and December are credited against the final tax liability calculated in the TD4. If you overpaid provisionally, the excess becomes a credit or refund.
Key Provisional Tax Dates for 2026
- 31 July 2026 — First instalment for FY2026 (50% of estimated 2026 tax)
- 31 December 2026 — Second instalment for FY2026 (50% of estimated 2026 tax)
- 31 March 2027 — Final tax return TD4 for FY2025; any balance of FY2025 tax due
- 31 March 2028 — Final tax return TD4 for FY2026
For all Cyprus compliance deadlines in one place, see our 2026 compliance calendar.
Sources
The interest rate and the additional-tax base on this page were re-verified on 11 September 2026 against:
- PwC, Tax Facts & Figures 2026 Cyprus, "Interest and Penalties": the official rate set by the Minister of Finance for all amounts due from 1 January 2026 is 3.5% (5.5% for 2025, 5% for 2024, 2.25% for 2023, 1.75% for 2020 to 2022)
- SPL, Tax alert: Provisional Tax Payment for Tax Year 2026: "A 10% additional tax is imposed on the difference between the final tax due and the provisional tax paid, in case the taxable income declared is less than 75% of the final taxable income for the year"
- IBCCS TAX, Cyprus Provisional Tax 2026: Deadlines, Rates and Penalties: the estimate must reflect the taxable income expected between 1 January and 31 December of the same year, and the same 75% threshold and 10%-on-the-difference base
The official interest rate is reset annually, so check the current year's figure before relying on it.
Provisional tax calculations benefit from accurate bookkeeping throughout the year. A Cyprus accountant who monitors your profitability quarterly can help you set the right estimate and avoid penalties. Find one in our directory of tax advisors.