Income Tax in Cyprus
personal taxation and the rates.
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Income Tax in Cyprus
Income tax in Cyprus is considered one of the most attractive regimes in the EU and worldwide. Cyprus tax residents are taxed on all chargeable income from all sources in Cyprus and abroad. Individuals who are not tax residents of Cyprus are taxed on certain income from sources in Cyprus. Income tax advantages attract international entrepreneurs, professionals and high-net-worth individuals to relocate to the country.
The 183 days rule
An individual who spends more than 183 days in Cyprus in a calendar year is considered a Cyprus tax resident. Days in and out of the republic are calculated as below:
- The day of departing from Cyprus is considered a day out of the republic
- The day of arrival in Cyprus is considered a day within the republic
- Arriving and departing out of Cyprus on the same day counts as one day of residence in Cyprus
- Departing and returning to Cyprus on the same day counts as a day out of the republic
- Foreign taxes paid can be credited against the personal income tax liability
The 60 days rule
As of 1 January 2017, an individual may also be considered a tax resident in Cyprus under the “60 days rule”. The rule applies when:
- do not reside in any other single state for a period exceeding 183 days in aggregate, and
- are not considered tax residents by any other state, and
- reside in Cyprus for at least 60 days, and
- have other defined Cyprus ties. To satisfy this condition, the individual must carry out business activity in Cyprus and/or be employed in Cyprus and/or hold an office (director) of a company tax resident in Cyprus at any time in the tax year, provided that such is not terminated during the tax year. The individual must also maintain a permanent residential property in Cyprus, either by rent or ownership.
The days in and out of Cyprus are calculated per the 183 days rule.
Personal Tax rates
| Taxable Income | Rate | Amount |
|---|---|---|
|
up to €19.500
|
zero |
zero |
|
€19.501 – €28.000 |
20% |
€1.700 |
|
€28.001 – €36.300 |
25% |
€2.075 |
|
€36.301 – €60.000 |
30% |
€7.110 |
|
€60.000 – €100.000 |
35% |
€14.000 |
|
€100.000 + |
35% |
€ – |
Income Tax Exemptions
| Type of Income | Exemptions |
|---|---|
|
Interest, except for interest arising
from the ordinary business activities
or closely related to the ordinary
business activities of an individual |
The whole amount |
|
Dividends |
The 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. For employment
commencing during or after 2012, the exemption applies for a period of 5 years starting from the tax year following the year of commencement of the employment, with the last
eligible tax year being 2020. This exemption may not be claimed in addition to the immediate 50% as mentioned above exemption for employment income.
*Update of July 26th, 2022 amendment to the Cyprus Income Tax Law L.118(I)/2002 (check update here) This exemption no longer applies to employment starting after July 26, 2022. Those who meet the requirements for this exemption before its expiry date (i.e., July 26, 2022) will continue to be eligible for the relevant five years. |
20% of the remuneration
with a maximum amount of
€8.550 annually |
|
Remuneration from any employment exercised in Cyprus by an individual who was not a resident of Cyprus before the commencement of the employment, the exemption applies for a period of 10 years for employment commencing as of 1 January 2012, provided that the annual remuneration exceeds €100.000. For employments starting as of 1 January 2015, the exemption does not apply in the case the said individual was a Cyprus tax resident for 3 (or more) tax years out of the five tax years immediately before the tax year of commencement of the employment nor in the preceding tax year. In certain cases, it is possible to claim the exemption where income falls below €100.000 per year.
*Update of July 26th, 2022 amendment to the Cyprus Income Tax Law L.118(I)/2002 (check update here) |
50% of the remuneration (now subject to conditions) since July 26th 2022 |
|
Profits of a foreign permanent
establishment under certain
conditions |
The whole amount |
|
Remuneration from salaried services rendered outside Cyprus for more than 90 days in a tax year to a non-Cyprus resident employer or to a permanent foreign establishment of a
Cyprus resident employer |
The whole amount |
|
Capital sums accruing to individuals from any payments to approved funds |
The whole amount |
|
Lump sum received by way of retiring gratuity, commutation of pension or compensation for death or injuries. |
The whole amount |
|
Profits from the production of films, series and other related audiovisual programs. |
The lower of 35% of the eligible expenditure and 50% of the taxable income.
Any restriction may be carried forward for five years. |
|
Profits from the sale of securities |
The whole amount |
Income Tax Deductions
| Type of Income | Deductions |
|---|---|
|
Loss of current year and previous
years (for individuals required
to prepare audited financial
statements, current year losses and
losses of the previous five years
only may be deducted) |
The whole amount |
|
Contributions to trade unions or
professional bodies |
The whole amount |
|
Donations to approved charities |
The whole amount |
|
Expenditure incurred for the
maintenance of a building in
respect of which there is in force a
Preservation Order |
Up to €1.200, €1.100 or
€700 per square meter |
|
Rental income |
20% of gross rental income |
|
Eligible infrastructure and technological equipment expenditure in the audiovisual industry |
20% |
|
Amount invested each tax year as from 1 January 2017 in approved innovative small and medium-sized enterprises either directly or indirectly |
Up to 50% of the taxable income as calculated prior to this deduction (subject to a maximum of €150.000 per year) |
|
Social Insurance, National Health System medical fund, private medical fund insurance contributions (maximum 1,5% of remuneration), pension and provident fund contributions (maximum 10% of remuneration) and life insurance premiums (maximum 7% of the insured
amount) |
Up to 1/5 of the chargeable income (1/6 up to tax year 2018) |
Want to know more about your personal tax?
Our Tax Specialists will be happy to advice you.