Every Cyprus tax resident is taxed on all income accrued or derived from all sources in Cyprus and abroad. Individuals who are not tax residents of Cyprus are taxed on certain income accrued or derived from sources in Cyprus.
Who is considered to be a Tax Resident in Cyprus?
An individual is considered to be a tax resident in Cyprus, if he spends in Cyprus more than 183 days in a 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 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
What are the tax rates regarding the personal income?
The following income tax rates apply to individuals:
|Chargeable income||Tax rate||Accumulated tax|
|0 – 19.500||Nil||Nil|
|19.501 – 28.000||20||1.700|
|36.301 – 60.000||30||10.885|
Foreign pension is taxed at the rate of 5%. An annual exemption of €3.420 is granted.
What exemptions apply?
The following are exempt from income tax:
- Interest, except for interest arising from the ordinary business activities or closely related to the ordinary business activities of an individual
- Remuneration from any office or employment exercised in Cyprus by an individual who was not a resident of Cyprus before the commencement of his employment, for a period of 5 years for employments commencing as from 1 January 2012 if the annual remuneration exceeds €100.000
- Remuneration from any office or employment exercised in Cyprus by an individual who was not a resident of Cyprus before the commencement of his employment, for a period of 3 years commencing from 1st January following the year of commencement of the employment
- Remuneration from salaried services rendered outside Cyprus for more than 90 days in a tax year to a non-Cyprus resident employer or to a foreign permanent establishment of a Cyprus resident employer.
- Profits of a permanent establishment abroad under certain conditions.
- Lump sum received by way of retiring gratuity, commutation of pension or compensation for death or injuries
- Capital sums accruing to individuals from any payments to approved funds (e.g. provident funds)
- Profits from the sale of securities (2)
What deductions apply?
The following are deducted from income:
- Contributions to trade unions or professional bodies (the whole amount)
- Loss of current year and previous years (the whole amount)
- Rental income (20% of the rental income)
- Donations to approved charities (with receipts) (the whole amount)
- Expenditure incurred for the maintenance of a building in respect of which there is in force a Preservation Order (Up to €1.200, €1.100 or €700 per square meter (depending on the size of the building)) (Up to 1/6 of the chargeable income)
- Social Insurance, provident fund, medical fund (maximum 1% of remuneration), pension fund contributions and life insurance premiums (maximum 7% of the insured amount)
- Special contribution (the whole amount)
For clarifications on personal income tax, please get in touch.