| Chargeable Income (?) |
Tax Rate |
| 0 to 19.500 | 0% |
| 19.501 to 28.000 | 20% |
| 28.001 to 36.300 | 25% |
| 36.301 to 60.000 | 30% |
| 60.001 and over | 35% |
All Cyprus tax resident individuals are taxed on all chargeable 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.
An individual is tax resident in Cyprus if (s)he spends in Cyprus more than 183 days in any one 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 a 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
Foreign taxes paid can be credited against the personal income tax liability
Foreign pension income is taxed at the flat rate of 5% on amounts over ?3.420. The taxpayer can however on an annual basis elect to be taxed at the normal tax rates and bands set out above.
Cyprus source widow(er)'s pension is taxed at the flat rate of 20% on amounts over ?19.500. The taxpayer can however on an annual basis elect to be taxed at the normal tax rates and bands set out above.
Cyprus Income Tax Rate for Individual Tax Payers
Lowest Individual Tax Rate is 20% and Highest Rate is 35%
| Chargeable Income (?) | Tax Rate |
| 0 to 19.500 | 0% |
| 19.501 to 28.000 | 20% |
| 28.001 to 36.300 | 25% |
| 36.301 to 60.000 | 30% |
| 60.001 and over | 35% |
An individual is liable for tax on his income as an employee and on income as a self-employed person.
Tax will be payable on income earned in Cyprus and overseas but excepting a salary received overseas by an individual who meets the test of a "permanent resident" of Cyprus.
A foreign resident who is employed in Cyprus pays tax only on income earned in Cyprus.
To be considered a resident of Cyprus, residence of at least 183 days in Cyprus during any calendar tax year must be established or a life that is centered in Cyprus.
An employer is obligated to deduct, immediately, each month, the amount of tax and national insurance due from a salaried worker.
A self-employed individual is obligated to make advance payments on income tax that will be offset on filing an annual report. The advance payments are made in three equal payments.
Certain payments are deductible from taxable income as detailed below.
The basic tax rate in 2012 is 10%.
Shipping companies sailing under Cyprus flag pay zero tax on profits and dividend paid.
Capital Gain for (Individuals)
The profit on the sale of real estate in Cyprus or of shares in an unlisted company that owns real estate, is taxable at the rate of 20%.
The tax must be paid on the difference between the cost, adjusted to the increase in the Index up until the date of sale, and the sale price.
There is a basic exemption for an individual. The exemption is conditional on the class of the real estate.
The amount of the lifetime exemption on the sale of a residential apartment is up to a maximum of EUR 85,430. (when living at least 5 years before sale).
The standard rate of tax for a corporation is 20% for gains from immovable property in Cyprus, or from sale of shares in an unlisted company owning such assets.
Sale of other shares is tax exempt.
Tax Deductions at Source in Cyprus
The employer is obligated to deduct tax at source from an employee and to make additional contributions to social security.
An employee: The employer's contribution is 8.5% of the salary. The employee's contribution is 6.8% of the salary.
The maximum amount on which social insurance is payable is EUR 54,396 per year.
Self employed pay 12.6% on income.
There is also a special contribution tax of 0%-3.5% which is imposed on salary and pension. The tax is shared equally by the employer and the employee.
Income in excess of the maximum is exempt from national insurance.
Dividend - 0%.
Royalties - 10% (5% for film royalties).
Interest - 0%.
Technical Services- 10%
The tax year in Cyprus is the year ending on December 31.
Advance payments of income tax are made as specified below:
An Individual - An individual whose income is only from a wage is not obligated to file an annual return.
The employer deducts tax from the employee and transfers it to the Tax Authority every month.
A self-employed individual must file an estimated return by the August 1 and three equal advance payments must be made according to the estimated return on August 1, September 30 and December 31.
A Limited Company - The principles for the tax return and advance payments are similar to those for an individual.
The tax payable must be paid by August 1, in the following tax year.
Arrears in the Payment of Tax - Arrears entail annual interest of 5% for payment up to 6 months from the date determined for payment or 9% if the arrears are in excess of 6 months.