Taxation

Working in Europe | Taxation/salaries | Cyprus

 

Anyone considered as Resident for Tax Purposes in Cyprus is is liable for paying tax. Residents are taxed on their worldwide income, including employment income, profits or other benefits from a business, profits or other benefits from an office or employment, dividends, interest or discounts, pensions and any rental income arising from immovable property. Non-residents are taxed only on their Cyprus-source income from employment exercised in Cyprus, a permanent establishment in Cyprus, rental of immovable property located in Cyprus and pensions from employment exercised in Cyprus.

 

The Tax Department of the Ministry of Finance is the authority in charge of administering the Cyprus direct tax legislation, which comprises various taxes and duties including income tax, as well as immovable property tax and capital gains tax.

The tax year is from 1 January to 31 December.

 

 

 

Residence Status for tax purposes

If you are present in Cyprus for a cumulative period of more than 183 days in any tax/calendar year, you will be considered as Resident for Tax Purposes (183-day rule).

Alternatively, you will also be considered as Resident for Tax Purposes if you meet ALL the following criteria (60-day rule):

  • stay in Cyprus for at least 60 days;
  • do not stay in another State for over 183 days;
  • are not tax residents in another State;
  • exercise any activity in Cyprus and/or are employed in Cyprus and/or hold office in a company established in Cyprus;
  • have a permanent residence in Cyprus which they own or rent.

 

Registration to the Tax Department

In order to register to the Tax Department, you'll need to submit the Registration for Direct Taxation Form to the district Tax Offices, in person or by e-mail.

The following supporting documents are required with your application:

  • Cypriot Citizens: copy of Identity Card
  • European Citizens - residents of Cyprus: copy of "Registration Certificate" from the Department of Civil Registry and Migration
  • Non-European Citizens - residents of Cyprus: copy of "Residence Permit" from the Department of Civil Registry and Migration
  • Foreign residents: a letter explaining the reasons requesting registration with a copy of an official document of the foreign country indicating tax identification number, or political identity number, or social security number.

Further information on Registration can be found here.

You may also consult your employer before submitting your application.

 

Tax filing and payment procedures

Each individual who is considered to be an employee and has taxable income must submit their income tax return to the Tax Department thorugh the TAXISnet platform, no later than 31 July of the year following the tax year.

Employment income is taxed on a Pay-As-You-Earn (PAYE) basis. This means your employer will withhold PAYE from your salaries on a monthly basis.

Each individual who is considered to be self-employed but has no obligation to submit audited financial statements (on the basis that the individual has turnover of less than EUR 70,000), must file electronically a personal tax return by 30 September of the year following the tax year. The final personal tax of an individual must be settled by 30 June of the year following the tax year.

Self-employed individuals preparing audited financial statements must submit electronically their personal tax return within 15 months after the end of the tax year (that is, the 2019 tax return should be filed electronically by 31 March 2021). The final tax for self-employed individuals preparing audited financial statements is due by 1 August of the year following the tax year.

Resident and non-resident individuals whose gross income does not exceed EUR 19,500 are not required to file tax returns.

 

Tax Rates

1. Income Tax

The Cyprus Income Tax Laws apply to both individuals and companies. Partnerships are not subject to tax as separate entities, and their income is allocated and assessed to tax on the partners, whether individuals or companies. Spouses are assessed to tax separately, each on their own income. The following taxation rates apply:

Taxable Income

Tax Rates

(from 2011 and onwards)

0 - €19500

0%

€19501 - €28000

20%

€28001 - €36300

25%

€36301 - €60000

30%

€60001 and above

35%

In order to arrive at the taxable income, your income from all sources will be added up, followed by the deduction of any income exempt from tax, charges and expenses incurred wholly and exclusively for the production of the income, personal allowances, wear and tear allowances, and losses carried forward from previous years.

  • premiums paid for approved life insurance policies or medical schemes
  • contributions made to approved pension or provident funds
  • contributions made under the General Health Scheme Laws.
 

 

2. Special Defence Contribution

The Special Defence Contribution is imposed on income from dividends, interest and rents received from tax residents whose home residence is in Cyprus. Persons who are not Cyprus tax residents are exempt from defence contribution.

Interest receivable from Cyprus or abroad

30%

Interest receivable on government development bonds, corporate debentures and government savings and interest acquired by approved provident funds

3%

Gross rental income from immovable property (reduced by 25%)

3%

Interest acquired by persons whose total annual gross income does not exceed EUR 12 000 (including the interest)

3%

Dividends receivable from companies in Cyprus or abroad

17%

 

 

 

3. Capital gains tax

Capital gains tax is imposed at a rate of 20% on the profit resulting from the sale of real estate in Cyprus or from the sale of shares of companies holding real estate in Cyprus (subject to double taxation provisions) regardless of the tax residence of a company or an individual.

 


 

Further Information

Further information and guidance on tax related matters in Cyprus can be found here.