Personal Income Tax

Basis of taxation for individuals

A Cyprus tax resident individual is taxed on all taxable income accruing or arising from sources both within and outside Cyprus. On the other hand a non-Cyprus tax resident individual is taxed only on taxable income accruing or arising within Cyprus.

An individual is considered as tax resident in Cyprus if he or she spends more than 183 days in a tax year (calendar year) in Cyprus.

TAX RATES FOR INDIVIDUALS

Taxable income for tax year

Tax Rate

Tax

Cumulative Tax

Euro €

%

First 19.500

0

0

0

From 19.501 to 28.000

20

1.700

1.700

From 28.001 to 36.300

25

2.075

3.775

From 36.301 to 60.000

30

7.110

10.885

Over 60.000

35

– 

– 

TAX EXEMPTIONS

Type of Income

Exemption

Interest income (other than interest arising in the ordinary course of business)

100%

Dividend income

100%

Remuneration from any employment of an individual in Cyprus who was not resident of the Republic before the commencement of employment

(applies for 5 years starting from 1st January following the year of employment for employments commencing during or after 2012. The exemption expires in 2020)

20% on remuneration or €8.550 (whichever is the lower)

Remuneration from any employment of an individual in Cyprus who was not resident of the Republic before the commencement of employment, provided the annual remuneration exceeds 100.000

(applies for 10 years starting from 1st January following the year of employment for employments commencing from 1st January 2012)

50% of remuneration

Remuneration from salaried services rendered outside the Republic for more than 90 days in a tax year to a non-Cyprus resident employer or to a permanent establishment outside the Republic of a Cyprus resident employer

100%

Profits arising from the sale of Securities (note 1)

100%

Profits of a permanent establishment outside the Republic (certain conditions apply)

100%

Lump sum received as a retiring gratuity, commutation of pension, death gratuity or compensation for death or injury

100%

Lump sums received from repayments of life insurance or from approved provident funds

100%

Foreign exchange (FX) gains other than gains arising from trading in foreign currencies and related derivatives (note 2)

100%

Notes:

1. The term “Securities” include shares, bonds, debentures, founders’ shares and other securities of companies or other legal persons, incorporated in Cyprus or abroad and options thereon. As per a circular issued by the Tax Authorities, the term also 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.

2. Persons trading in FX have an option to make an irrevocable election to be subject to tax only on realized FX differences.

TAX DEDUCTIONS

Type

Deduction

Contributions to Social Insurance, provident fund, pension funds, medical fund and life insurance premiums (up to 7% of the amount insured)

Restricted to 1/6 of the taxable income

Special contribution of the private sector employees, pensioners and self-employed individuals

100%

Subscriptions to professional bodies and trade unions

100%

Donations to approved charities (receipts required)

100%

Rental income

20%

Losses of the current and previous 5 years (only with audited financial statements)

100%

Cost incurred for acquisition of shares in an innovating business

100%