A person who spends 183 days or more in a year in Cyprus is considered “tax resident” in Cyprus.

Tax resident pay personal income tax on all income from all sources no matter where in the World it is derived.

Individuals not tax resident in Cyprus are taxed only on income derived from sources in Cyprus.

The following income tax rates apply to individuals:

Chargeable income

Tax rate

%

0 – 19,500

Nil

19.501 – 28,000

20

28.001 – 36,300

25

36,300 – 60,000

30

Over 60,000

35

Foreign pensions are taxed at 5% and are subject to an annual exemption of €3.417.

Exceptions

  • Interest – 100%
  • Dividends – 100%
  • Profits from the sale of securities(1) – 100%
  • Remuneration earnt in Cyprus by an individual who becomes resident in Cyprus during the term of employment.  For the period up to and including the 3 tax years following commencement of the employment – 20% (up to a maximum of €8.543 per year)
  • Salary for services provided outside of Cyprus to a non-Cyprus resident employer – 100%
  • Lump sum payment for retirement, pension, or compensation for death or injuries. – 100%
  • Capital sums accruing to individuals from any payments to approved funds – 100%

(1) “Securities” means; debentures; shares; bonds; and other securities related to legal entities howsoever incorporated and any such options thereon.

Tax deductions

The following is deducted from income:

  • Contributions to trade unions or professional bodies – 100%
  • Loss of current and/or previous years – 100%
  • Rental income – 20%
  • Donations to approved charities – The whole amount
  • Costs incurred for building maintenance where there is a Preservation Order – Up to €598 per square meter (depending on the size of the building)
  • Social Insurance, provident fund, medical fund, pension fund contributions and life insurance premiums (the allowable annual life insurance premium is restricted to 7% of the insured amount) Up to 1/6 of the chargeable Income