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Cyprus Tax: General Framework

Companies and natural persons (individuals) are subject to the same Cyprus income tax laws (legal persons). Partnerships are not taxed as independent entities, according to Euraxess Cyprus (euraxess.org.cy); rather, each partner is subject to income tax. Married couples pay separate taxes. Cyprus uses the calendar year as its tax year.
Individuals resident in Cyprus

If a person stays in Cyprus, they are considered a resident for tax purposes.

The “183-day rule” states that you must be a tax resident for more than 183 days of the tax year; the “60-day rule” states that you must be a tax resident for at least 60 days, have your permanent residence in the Republic, and conduct business there.

Taxable Income

A person must pay income tax if their annual income exceeds 19,500 euros. Personal income tax (PIT) rates are in effect; for instance, the rate is 20% for income between 19,501 and 28,000 euros.

Types of Income Taxed

Income from employment, trade, rent, property gains, pensions, and annuities are all subject to tax. Foreign athletes and artists are subject to a 10% tax on their earnings in Cyprus.

Wealthy people relocating to Cyprus
A high earner is someone with an annual income of over 100,000 euros. For the first ten years, a high-earner migrating to Cyprus will receive a 50% reduction.

Self-employed individuals cover social security with 15.6% of their salary (some limits apply, set annually). Taxes are paid in two equal installments on July 31 and December 31 of each year, with the expected amount owing due by July 31. If a self-employed person makes more than 70,000 a year, he/she must present audited financial statements.

Both employers and workers
For social security, both the employer and the employee each contribute 8.3%. On December 31, 2023, this rate will change; an 8.8% percentage will then be in effect.

Other details
Dividends are exempted from income tax.
Rental income is taxed at 20%.
There is no income tax for a retirement bonus.

Corporate income tax (CIT)

Residents of tax jurisdictions must pay taxes on their rental income. For people (physical beings), the rate ranges from 20% to 30%. The rate for businesses (legal persons) is 12.5%. Rental revenue is subject to a Special Contribution for Defense; the rate is 3% on 80% of the rental income for both individuals and corporations.

20% of gross rental income is subject to tax deduction as of January 2021.

Special Defense Contribution (SCD)

Some sources of income, such as dividend income, interest income, and rental income, need a particular contribution for the defense. It stands at 17%.

Moreover, if a person has a Cyprus domicile and is a Cyprus tax resident, they must pay SCD. domiciled in Cyprus can refer to one of two things. Either that, or they have had a domicile (residence) in Cyprus since birth. Alternatively, they acquired and kept a residence in Cyprus (in accordance with the Wills and Succession Laws); or, second, they were tax residents of Cyprus for 17 out of the previous 20 tax years.

If a company is a Cyprus tax resident, it must pay SCD.
Resident taxpayers are exempt from SCD.

Property Taxes

On January 1, 2017, the real estate tax was removed. The municipality now levies an annual municipality tax in place of real estate taxes. The sum is determined by the worth of the property, while rates may vary according to location. A community (local authority) charge will also apply.

Transfer of Buildings/Land
The valuation of the land will determine if transfer fees are assessed. If VAT was levied when the land was purchased, there would be no transfer cost. Except in cases where the building permit for the new property was granted prior to May 1, 2004, VAT is imposed at a rate of 19% on new properties.

Added-value tax (VAT)
Businesses must register for VAT if their annual revenue exceeded 15,600 euros. Self-employed people must register for VAT as well and must abide by all applicable rules and regulations. Four times a year, VAT is electronically payed.

GHS (General Health System)
As of the first of March 2020, employees and pensioners will pay 2.65% of their monthly income into the GHS, according to gesy.org. Employers must contribute 2.90% of each employee’s salary to GHS. Self-employed people will make 4% of the contribution.

Tax Payments
It is necessary to register for income tax (using form T.D. 2001) and register for VAT (using form T.D. 1101). (if applicable). A Tax Identification Code (TIC) and a VAT registration certificate will thereafter be given to the person or business (if applicable). You may find all the necessary forms at mof.gov.cy.

Our Tax Services

Our tax and legal departments offer the below:

For companies:
  • General Tax Advice
  • Review and advice on company’s tax position
  • Assist in filing of tax returns
  • Cooperate with Cyprus Tax Department for any issues
  • Obtaining Cyprus Tax certificate
  • Ensuring your company is fully compliant with tax regulations and deadlines
For Individuals:
  • Preparation and submission of tax returns
  • Advice on Income Tax, Inheritance Tax, and Capital Gains Tax
  • Inform you of the deadlines and amounts involved for your tax payments

For more information contact us directly.

Need Help?

If you need any assistance, please feel free to contact us through the following form and we will contact you within 24 hours.

Ioannis Michalaki

Ioannis Michalaki

CEO, Partner
Elena Pitsillidou

Elena Pitsillidou

Managing Director, Partner