Personal Income tax

  • An individual is taxed if he is a resident of Cyprus.
  • An individual is considered resident if he spends in Cyprus more than 183 days per fiscal year.
  • All Cyprus residents are taxed in Cyprus on their worldwide income. Such income includes:
    • Employment income (including benefits)
    • Profits from a business activity
    • Rentals from immoveable property and royalties
    • Pensions received (pensions from abroad may be taxed at the rate of 5% for amounts in excess of €3.417)
    • In the case of granting of a loan by a company to its shareholders or directors who are physical persons, then it will be deemed that this person has a monthly benefit equal to 9% of his debit balance and this amount will be taxable. The tax is paid to the Inland Revenue on a monthly basis via the PAYE system.
  • Non-residents of Cyprus are taxed in Cyprus only on income earned in Cyprus. Such income includes:
    • Employment income (including benefits), in relation to services rendered in Cyprus
    • Profits from a business activity which is carried out through a permanent establishment in Cyprus
    • Rentals from immoveable property situated in Cyprus
    • Pensions in respect of employment exercised in Cyprus, with the exception of pension paid from a fund established by the Government or local authority
  • Personal tax rates

Chargeable income

 

Tax rate
%

 

Accumulated tax

 

0 - 19.500

 

Nil

 

Nil

 

19.501 - 28.000

 

20

 

1.700

 

28.001 - 36.300

 

25

 

3.775

 

36.301 - 60000

 

30

 

10.885

 

Over 60000

 

35

     
           
  • 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.
    • 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.
  • Special Contribution for Defence (withholding tax):
    • 30% on interest received either in Cyprus or abroad (was 15% up to 29/4/13).
    • 17% on dividends received either from abroad or in Cyprus (was 20% in 2013).
    • 3% on 75% of rental income from property wherever located.
  • Special Contribution applicable to employees of the private sector, self-employed and pensioners as follows:
Gross monthly emoluments (€) %
Until 2.500 0
2.500-3.500 2.5
3.500 - 4.500 3
4.500 and over 3.5

 

  • Allowances deductible from income by individuals
    • Social insurance contributions, life insurance premiums, and contributions to approved provident funds, pension schemes and medical schemes.
    • Contributions to trade unions or professional bodies.
    • Loss of current year and previous 5 years may be deducted.
    • Rental income (20% may be deducted).
    • Donations to approved charities (with receipts).
    • Special contribution.

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