side-area-logo

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.

In 2017, the Income Tax Law of Cyprus has been amended with regard to the provisions relating to the definition of tax residency of individuals in Cyprus, replacing the 183 days rule.

The new definition, which becomes effective as of 1 January 2017,  states that if an individual does not remain in any other state for a period exceeding 183 days in the year of assessment and is not tax resident in any other state for the same year of assessment, then that individual will be considered tax resident in Cyprus if all of the below conditions are met:

  • The individual remains in Cyprus for at least 60 days in the year of assessment and,
  • The individual carries out business in Cyprus or is employed in Cyprus or holds a position to a person tax resident in Cyprus at any time during the year of assessment and,
  • The individual maintains a permanent residence in Cyprus either owned or rented.

If the individual ceases to carry out business in Cyprus or be employed in Cyprus or hold a position to a person tax resident in Cyprus then the individual will not continue to be tax resident in Cyprus for that year of assessment.

Tax Rates for Individuals:
Taxable income Tax rate Tax Cumulative tax
Euro € % Euro € Euro €
First 19.500 0 0 0
From 19500 to 28.000 20 1.700 1.700
From 28.001 to 36.300 25 2075 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 exercised in the Republic by an individual who was resident outside the Republic before the commencement of the employment 20% of remuneration or €8.550 (whichever is lower)
Remuneration from any employment exercised in the Republic by an individual who was resident outside the Republic before the commencement of the employment, provided that the annual remuneration of the employee exceeds €100.000  50% of remuneration 
Remuneration from salaried services outside the Republic for more than 90 days in a tax year to a non-resident employer or a permanent establishment outside the Republic of a 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 retiring gratuity, commutation of pension, death gratuity or as consolidated compensation for death or injury  100%
Lump sum received from repayment of life insurance or approved provident funds  100%
Foreign exchange (FX) gains, other than gains arising from trading in foreign currencies and related derivatives  100%
Capital gain arising from the disposal of intellectual property rights under the IP regime  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.

Tax Deductions:
Type Deduction
Contributions to Social insurance, to approved provident and pension funds, to the General Healthcare System, to medical funds and life insurance premiums  Restricted to 1/5 of the net taxable income before these allowances
Subscriptions to professional bodies and trade unions 100%
Donations to approved charitable organisations 100%
Rental income on buildings 20%
Interest relating to the acquisition of assets used in a business or to the acquisition of a building for rental purposes 100%
Expenditure for scientific research  100%
Expenditure on film infrastructure and technological equipment (certain conditions apply)  Up to 20%
Our Tax Practice Portfolio

Our Tax Department has been thriving for over a decade, with our clients seeking our professionals’ advice and assistance in all aspects relating to taxation for corporates as well as individuals, in line with the latest local and international tax developments.

Our clients entrust us with the structuring of their operations in a way that incorporates the applicable tax incentives and ensures their compliance with any and all of their tax obligations and filing of their tax returns. The exceptional quality of our tax professionals is the reason why our clients select us to be their entrusted tax partners.

Contact us today for an initial, complimentary consultation.

LET’S WORK

TOGETHER.

Image icon
T: +357 22 021100
F: +357 22 757566
Image icon
Image icon
1 Kinyras Street, Kinyras Tower,
3rd Floor, 1102 Nicosia, Cyprus
Image icon
servpro.com.cy
© ServPRO 2011-2021. All Rights Reserved. Policies
Name*
Untitled*