Foreign employees of Cyprus companies

Cyprus companies with foreign shareholders may decide to set-up a fully fledged office in Cyprus in order to carry out their operations. Such companies can obtain permission to employ expatriate staff who will be living and working in Cyprus.
Work permits can be readily obtained by foreign employees of such companies which set up an office in Cyprus provided they work in executive positions or in positions where similar skills cannot be found amongst the local labour force.
All Cyprus resident individuals (local and expatriate) are taxed with the same tax rates on their income arising in Cyprus and abroad. An individual is deemed resident if he lives in Cyprus for one or more periods which exceed 183 days per fiscal year. Non-residents are taxed only on their income arising in Cyprus (see also Cyprus Tax Overview).

  • Taxation of expatriates
    • If employed outside Cyprus, no taxation
    • If employed in Cyprus for 183 days or more, taxed on all income from employment
    • If employed in Cyprus for less than 183 days, taxed in Cyprus on the salary attributable to the employment in Cyprus.
  • The following types of income are exempt from taxation
    • Dividends
    • Interest received
    • Profits from the sale of shares
    • Salaried services rendered abroad by a Cyprus resident for a period totaling more than 90 days in a fiscal year to an employer who is not a Cyprus resident or at the permanent establishment abroad of a Cyprus resident
  • Special contribution for defence for resident individuals:
    • 30% on interest received either in Cyprus or abroad (was 15% up to 29/04/13).
    • 17% on dividends received either from abroad or in Cyprus (was 20% in 2013).
    • 3% on 75% of rental income from property wherever located.
  • Allowances deductible from income by individuals
    • Social insurance contributions
    • Life insurance premiums
    • Contributions to approved provident funds, pension schemes and medical schemes
    • For an employee who was not a Cyprus resident and is now taking up employment in Cyprus for the first time, a special exemption from income tax will apply for the first three years starting on January 1 following the year in which employment in Cyprus commenced. The exemption amounts to 20% of salaried income up to a maximum annual amount of €8,550.
    • Emoluments received from employment in Cyprus by an individual who was not a resident of Cyprus before taking up employment. This exemption is applicable for a period of 5 years commencing from the year of commencement of employment. Under this exemption, 50% of emoluments which exceed the amount of €100.000 are exempted from income tax.
  • Personal tax rates

Chargeable income

Tax rate
%

Accumulated tax

0 – 19.500

Nil

 

19.501 - 28.000

20

1.700

28.001 – 36.300

25

3.775

36.301 – 60.000

30

10.885

Over 60000

35

 

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