Personal Income Tax
All Cyprus Tax residents are taxed on all income accrued or derived from all sources in Cyprus and abroad. Individuals who are not Cyprus tax residents are taxed on income accrued or derived from sources in Cyprus only.
An individual is considered Cyprus Tax resident if he/she spends in Cyprus more than 183 days in any one calendar year. Days in and out of Cyprus are calculated as follows:
- The day of departure from Cyprus counts as a day of residence outside Cyprus.
- The day of arrival in Cyprus counts as a day of residence in Cyprus.
- Arrival and departure from Cyprus in the same day counts as one day of residence in Cyprus.
- Departure and arrival in Cyprus in the same day counts as one day of residence outside Cyprus.
- Foreign taxes paid can be credited against the personal income tax liability.
Personal Tax Rates
Chargeable Income | Tax rate | Tax | Accumulated Tax |
€ | % | € | € |
0 – 19.500 | nil | nil | nil |
19.501 – 28.000 | 20 | 1.700 | 1.700 |
28.001 – 36.300 | 25 | 2.075 | 3.775 |
36.300 – 60.000 | 30 | 7.110 | 10.885 |
60.000 and above | 35 |
|
|
The first €3.420 per annum of any foreign pension is free of tax and the excess over that amount is taxed at the rate of 5%. A person may elect in any year to have his/her pension included in his/her chargeable income so as to utilise personal allowances.
Exemptions
Type of Income | Exemption Limit |
| The whole amount |
| The whole amount |
| The whole amount |
| The whole amount |
| The whole amount |
| 20% of the remuneration or €8.550 (whichever is the lower) |
| 50% of the remuneration |
| The whole amount |
| The whole amount |
| The whole amount |
| The whole amount |
| The whole amount |
| The whole amount |
*under certain conditions |
Notes:
- Interest income arising in the ordinary course of business, including interest closely connected with the carrying on of the business, is not considered as interest but trading profit and is not exempt
- Interest Income not arising from the ordinary business activities and divident income are subject to Special Contribution for Defence.
- The term “Securities” is defined as shares, bonds, debentures, founders’ shares and other securities of companies or other legal persons, incorporated in Cyprus or abroad and options thereon. A circular has been issued by the Tax Authorities in 2008 further clarifying what is included in the term Securities. According to the circular the term includes, among others, options on Securities, short positions on Securities, futures/forwards on Securities, swaps on Securities, depositary receipts on Securities (ADRs, GDRs), rights of claim on bonds and debentures (rights on interest of these instruments are not included), index participations only if they result on Securities, repurchase agreements or Repos on Securities, units in open-end or close-end collective investment schemes). The circular also clarifies specific types of participation in foreign entities which are considered as Securities.
Deductions
Type of Income | Exemption Limit |
| The whole amount |
| The whole amount |
| The whole amount |
| Up to 1/6 of the chargeable income |
| 20% of rental income |
| Up to €1.200, €1.100 or €700 per square meter (depending on the size of the building) |
| The whole amount |
Notes:
- The annual life insurance premium is restricted to 7% of the insured amount
- Life insurance policies, in respect to the life of the claimant’s spouse, which were in existence up to the 31 December 2002 and for which the claimant was receiving a tax allowance, will continue to be deductible by the claimant
- In the event of cancellation of a life insurance contract within 6 years from the date it was entered into, part of the life insurance premiums already given as an allowance will be taxable as follows:
– Cancellation within 3 years 30%
– Cancellation between 4 to 6 years 20%
Gross monthly emoluments from employment / pension | Government and semi-government employees and pensioners | Private sector employees, self-employed individuals and private sector pensioners (2)(3)(4) |
€ | ||
2014 | ||
First 1.500 | Nil | Nil (minimum €10) |
From 1.501 – to 2.500 | 2,5%(1) | 2,5% |
From 2.501 – to 3.500 | 3,0%(1) | 3,0% |
Over 3.500 | 3,5%(1) | 3,5% |
Notes:
1. The Special Contribution rate becomes 3%, 3,5% and 4% respectively
for highly ranked civil service officials/ employees within their
respective scale.
2. In the case of private sector employed individuals and private sector
pensions the Special Contribution relates to services rendered
in Cyprus. In the case of self-employed individuals the Special
Contribution relates to any business carried on in Cyprus.
3. For private sector employed individuals the Special Contribution
does not apply, inter alia, on retirement gratuities, on payments from
approved provident funds, on remuneration of the crew of qualifying
ships and on reimbursements of business expenses.
4. In the case of private sector employed individuals the recipient of
the remuneration is liable for half the Special Contribution and the
employer for the other half.