Anyone considered as Resident for Tax Purposes in Cyprus is is liable for paying tax. Residents are taxed on their worldwide income, including employment income, profits or other benefits from a business, profits or other benefits from an office or employment, dividends, interest or discounts, pensions and any rental income arising from immovable property. Non-residents are taxed only on their Cyprus-source income from employment exercised in Cyprus, a permanent establishment in Cyprus, rental of immovable property located in Cyprus and pensions from employment exercised in Cyprus.
The Tax Department of the Ministry of Finance is the authority in charge of administering the Cyprus direct tax legislation, which comprises various taxes and duties including income tax, as well as immovable property tax and capital gains tax.
The tax year is from 1 January to 31 December.
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If you are present in Cyprus for a cumulative period of more than 183 days in any tax/calendar year, you will be considered as Resident for Tax Purposes (183-day rule).
Alternatively, you will also be considered as Resident for Tax Purposes if you meet ALL the following criteria (60-day rule):
- stay in Cyprus for at least 60 days;
- do not stay in another State for over 183 days;
- are not tax residents in another State;
- exercise any activity in Cyprus and/or are employed in Cyprus and/or hold office in a company established in Cyprus;
- have a permanent residence in Cyprus which they own or rent.
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In order to register to the Tax Department, you'll need to submit the Registration for Direct Taxation Form to the district Tax Offices, in person or by e-mail.
The following supporting documents are required with your application:
- Cypriot Citizens: copy of Identity Card
- European Citizens - residents of Cyprus: copy of "Registration Certificate" from the Department of Civil Registry and Migration
- Non-European Citizens - residents of Cyprus: copy of "Residence Permit" from the Department of Civil Registry and Migration
- Foreign residents: a letter explaining the reasons requesting registration with a copy of an official document of the foreign country indicating tax identification number, or political identity number, or social security number.
Further information on Registration can be found here.
You may also consult your employer before submitting your application.
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Each individual who is considered to be an employee and has taxable income must submit their income tax return to the Tax Department thorugh the TAXISnet platform, no later than 31 July of the year following the tax year.
Employment income is taxed on a Pay-As-You-Earn (PAYE) basis. This means your employer will withhold PAYE from your salaries on a monthly basis.
Each individual who is considered to be self-employed but has no obligation to submit audited financial statements (on the basis that the individual has turnover of less than EUR 70,000), must file electronically a personal tax return by 30 September of the year following the tax year. The final personal tax of an individual must be settled by 30 June of the year following the tax year.
Self-employed individuals preparing audited financial statements must submit electronically their personal tax return within 15 months after the end of the tax year (that is, the 2019 tax return should be filed electronically by 31 March 2021). The final tax for self-employed individuals preparing audited financial statements is due by 1 August of the year following the tax year.
Resident and non-resident individuals whose gross income does not exceed EUR 19,500 are not required to file tax returns.
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The Cyprus Income Tax Laws apply to both individuals and companies. Partnerships are not subject to tax as separate entities, and their income is allocated and assessed to tax on the partners, whether individuals or companies. Spouses are assessed to tax separately, each on their own income. The following taxation rates apply:
Taxable Income
Tax Rates
(from 2011 and onwards)
0 - €19500
0%
€19501 - €28000
20%
€28001 - €36300
25%
€36301 - €60000
30%
€60001 and above
35%
In order to arrive at the taxable income, your income from all sources will be added up, followed by the deduction of any income exempt from tax, charges and expenses incurred wholly and exclusively for the production of the income, personal allowances, wear and tear allowances, and losses carried forward from previous years.
Residents are taxed on their worldwide income from the following sources:
- business profits
- employment income
- dividends and interest income
- pensions and annuities
- property income such as rents, royalties etc
- any consideration in respect of trading goodwill.
Non-Residents are taxed on their income from the following sources:
- business profits from a permanent establishment situated in Cyprus
- employment income from salaried services provided in Cyprus
- pensions from employment in Cyprus
- income from property situated in Cyprus such as rents, royalties etc
- any consideration in respect of trading goodwill arising in Cyprus
- income from the exercise of any profession or vocation in Cyprus, including the remuneration of entertainers from performances in Cyprus.
Income exempt from tax includes:
- profit on the disposal of securities (such as shares, bonds, debentures etc. of companies incorporated in Cyprus or abroad, and options thereon)
- dividends received
- the whole interest income of individuals (interest income generated from the ordinary activities of a person, including interest which is closely connected with the ordinary activities of a person, will be treated as trading income and not as “interest income” and hence will be fully chargeable to corporation or income tax).
- lump sums received on retirement
- income from a scholarship or similar educational endowment
- capital sums accruing to individuals from approved life insurance policies and approved provident or pension funds
- emoluments of foreign diplomatic and consular representatives who in accordance with the rules and principles of International Law enjoy diplomatic immunity on the basis of reciprocity
- income of individuals from the provision of salaried services abroad to a non-resident employer or an overseas permanent establishment of a resident employer, for an aggregate period exceeding 90 days in the tax year.
Personal allowances and deductions for individuals:
- premiums paid for approved life insurance policies or medical schemes
- contributions made to approved pension or provident funds
- contributions made under the General Health Scheme Laws.
TheSpecial Defence Contribution is imposed on income from dividends, interest and rents received from tax residents whose home residence is in Cyprus. Persons who are not Cyprus tax residents are exempt from defence contribution.
Interest receivable from Cyprus or abroad
30%
Interest receivable on government development bonds, corporate debentures and government savings and interest acquired by approved provident funds
3%
Gross rental income from immovable property (reduced by 25%)
3%
Interest acquired by persons whose total annual gross income does not exceed EUR 12 000 (including the interest)
3%
Dividends receivable from companies in Cyprus or abroad
17%
Capital gains tax is imposed at a rate of 20% on the profit resulting from the sale of real estate in Cyprus or from the sale of shares of companies holding real estate in Cyprus (subject to double taxation provisions) regardless of the tax residence of a company or an individual.