Personal Tax
Low income tax rate
Income tax exemptions
Income tax deductions
Worldwide income under one tax regime.
A Cyprus tax resident is taxed on all the collected income from sources within or out of Cyprus. A non-Cyprus resident is taxed on certain income collected from sources in Cyprus.
Days in and out of the Cyprus Republic are calculated as follows:
- The day of departing out of Cyprus is considered a day out of the republic
- The day of arrival in Cyprus in considered a day within the republic
- Arriving and departing out of the Cyprus in the same day counts as one day of residence in Cyprus
- Departing and returning in Cyprus the same day counts as a day out of the republic
- Foreign taxes paid can be credited against the personal income tax liability
Personal Tax in Cyprus.
The low corporate tax rate, the attractive income tax regime with multible tax exemptions and deductions are the most important advantages, but Cyprus has much more to offer. A state member of the European Union, Cyprus provides the opportunity to companies and investors to operate under a secure legal framework and environment, protecting businesses and at the same time promoting their growth.
The tax obligations based on the yearly income of any Cyprus Tax Resident.
Any individual who spends more than 183 days in Cyprus in a calendar year, is considered a Cyprus Tax Resident and therefore can be taxed on his income. In other circumstances an individual can also be considered a Cyprus Tax Resident under the more recent 60 days rule.
A Cyprus Tax resident is taxed on his worldwide income.
Tax rates as the table above are applied on any amount of income in excess of €19.500.
If for example your annual income is 20.000, you will be taxed 20% on the 500 Euro income.
Yes, many income tax exemptions apply. Check the exemptions table below.
Exemptions of income tax for individuals
| Type of Income | Exemption |
|---|---|
| Dividends | Whole amount |
| Remuneration from any employment exercised in Cyprus by an individual who was not a resident of Cyprus before the commencement of the employment. Exemption applies for a period of 17 years provided that the annual remuneration exceeds €55.000. | 50% of the remuneration |
| Remuneration from any employment exercised in Cyprus by an individual who was not a resident of Cyprus before the commencement of the employment, for 3 years since the 1st of January of the year following the year the employment started. For employments commencing after the 1st of January 2012 or later the exemption applies for a period of 5 years starting from the tax year following thew year of commencement of the employment with the last eligible tax year being 2020. This exemption may not be claimed in addition to the immediately above mentioned 50% exemption for employment income | 20% of the remuneration with a maximum amount €8.550 annually |
| Remuneration from salaried services outside Cyprus for more than 90 days to a non-Cyprus resident employer or to a foreign permanent establishment of a Cyprus resident employer | Whole amount |
| Profits from the sale of securities | Whole amount |
| Lump sum received by way of retiring gratuity, commutation of pension or compensation for death or injuries. | Whole amount |
| Capital sums accruing to individuals from any payments to approved funds (e.g provident funds) | Whole amount |
| Profits of a foreign permanent establishments under certain conditions | Whole amount |
Yes there are some expenses that are deducted from the annual income tax.
TAX Deductions on the income of individuals
| Type of income | Deducted form income |
|---|---|
| Donations to approved charities | Whole amount |
| Since the 1st of January 2017 any amount invested each tax year in approved innovative small and medium size enterprises, either directly or indirectly | Up to the 50% of taxable income as calculated prior to this deduction (maximum of €150.000 deductions per year) The amount of discount that was not used can be transferred and claimed in the next 5 years. |
| Contributions to trade unions or professional bodies | Whole amount |
| Income from property rental | 20% of rental income |
| Social insurance contributions, medical funds (maximum 1.5% of remuneration), pension and Provident fund contributions (maximum of 10% of remuneration) and life insurance (maximum 7% of the insured amount) | Up to 1/5 of the chargeable income |
| Loss of current year and previous years (for individuals required to prepared audited financial statements, current year losses and losses of the previous five years only may be deducted) | Whole amount |
Yes. Defence tax on Dividend , Interest and Rental income is applied provided that the Non – Domicile status as explained in the tax incentives tab is not granted.
Yes, every employed or self-employed individual has to pay social securities on top of his net salary. In the case of employment, the employer also contributes to the amount towards social security department.
Yes. There is a guide we have prepared and it’s free to download on our library section.
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