Last partial update, May 2014.
Cyprus Income Tax Rates
Cyprus Income Tax for an Individual
- The tax system in Cyprus is progressive.
In other words, the higher your income, the higher the rate at which you will pay tax.
In 2014 the tax rates for an individual are 20% - 35%.
- There is a reduced rate and/or exemptions that are granted for certain forms of income.
- The standard rate of Cyprus corporate tax for 2014 is 12.5%.
- Resident companies and individuals are subject to defense contribution for passive income, e.g. rental, dividends etc. the rates are 3%-30%.
- Non residents are exempt from this tax.
Cyprus Individual income tax rates 2014
- An individual is liable for tax on his income as an employee and on income as a self-employed person.
Tax will be payable on income earned in Cyprus and overseas but excepting a salary received overseas by an individual who meets the test of a "permanent resident" of Cyprus.
A foreign resident who is employed in Cyprus pays tax only on income earned in Cyprus.
- To be considered a resident of Cyprus, residence of at least 183 days in Cyprus during any calendar tax year must be established or a life that is centered in Cyprus.
- An employer is obligated to deduct, immediately, each month, the amount of tax and national insurance due from a salaried worker.
- A self-employed individual is obligated to make advance payments on income tax that will be offset on filing an annual report. The advance payments are made in three equal payments.
- Certain payments are deductible from taxable income as detailed below.
||Tax Base (EUR)
||Up to 19,500
||60,001 and over
Cyprus Corporate Tax
- The basic tax rate in 2012 is 10%.
- Shipping companies sailing under Cyprus flag pay zero tax on profits and dividend paid.
Cyprus Capital Gains
Capital Gains (for an individual)
- The profit on the sale of real estate in Cyprus or of shares in an unlisted company that owns real estate, is taxable at the rate of 20%.
- The tax must be paid on the difference between the cost, adjusted to the increase in the Index up until the date of sale, and the sale price.
- There is a basic exemption for an individual. The exemption is conditional on the class of the real estate.
- The amount of the lifetime exemption on the sale of a residential apartment is up to a maximum of EUR 85,430. (when living at least 5 years before sale).
Cyprus Capital Gains (for a corporation)
Cyprus Reporting Dates and Payment
- The standard rate of tax for a corporation is 20% for gains from immovable property in Cyprus, or from sale of shares in an unlisted company owning such assets.
Sale of other shares is tax exempt.
The tax year in Cyprus is the year ending on December 31.
Advance payments of income tax are made as specified below:
- An Individual - An individual whose income is only from a wage is not obligated to file an annual return.
The employer deducts tax from the employee and transfers it to the Tax Authority every month.
A self-employed individual must file an estimated return by the August 1 and three equal advance payments must be made according to the estimated return on August 1, September 30 and December 31.
The return must be filed by April 30.
- A Limited Company - The principles for the tax return and advance payments are similar to those for an individual.
The tax payable must be paid by August 1, in the following tax year.
Arrears in the Payment of Tax - Arrears entail annual interest of 5% for payment up to 6 months from the date determined for payment or 9% if the arrears are in excess of 6 months.
Cyprus Deduction of Tax at Source
Taxation of Employee
The employer is obligated to deduct tax at source from an employee and to make additional contributions to social security.
Cyprus Social Insurance
- An employee: The employer's contribution is 8.5% of the salary. The employee's contribution is 6.8% of the salary.
- The maximum amount on which social insurance is payable is EUR 54,396 per year.
- Self employed pay 12.6% on income.
- There is also a special contribution tax of 0%-3.5% which is imposed on salary and pension.
The tax is shared equally by the employer and the employee.
- Income in excess of the maximum is exempt from national insurance.
Other deductions for payments to non residents
- Dividend - 0%.
- Royalties - 10% (5% for film royalties).
- Interest - 0%.
- Technical Services- 10%