Taxation of employees

     

  • 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 € 3.417,00) .
  • 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 Euro €
    Tax rate
    %
     
    0 - 19 500
    nil
     
    19 501 - 28 000
    20
     
    28 001 - 36 300
    25
     
    36 301 - 60 000
    30
    		  
    Over 60 001
    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 totalling 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 (withholding tax):
    • 15% on interest received either in Cyprus or abroad until 31/08/2011
    • 17% on dividends received either from abroad or in Cyprus from 01/09/2011 until 30/12/2011 (basic law)
    • 20% on dividends received either from abroad or in Cyprus for the years 2012 and 2013 exceptionally
    • 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 amounting to 20% of his salaried income up to a maximum annual amount of €8 543 .
    • For income in excess of €100.000, 50% deduction is allowed for the first five years of employment