PERSONAL INCOME TAX
TAXATION
Cyprus tax residents are taxed on all income accrued or derived from all sources in Cyprus and abroad. Non-tax resident individuals are taxed on income accrued or derived from sources in Cyprus only provided that they are physically in Cyprus when earning this income.
CYPRUS TAX RESIDENTS
An individual is considered to be tax resident in Cyprus if he stays in Cyprus more than 183 days in the year of assessment.
Tax residents are taxable on the following income:
• Income from business in Cyprus and outside Cyprus;
• Income from any office or employment.;
• Dividends and interest;
• Rents and royalties in Cyprus and abroad;
• Pensions and annuities in Cyprus.
NON-TAX RESIDENTS
Non-tax residents are taxable on the following income:
- Income from a permanent establishment situated in Cyprus;
- Income from any office or employment exercised in Cyprus;
- Pensions derived from past employment exercised in Cyprus;
- Rent from property situated in Cyprus;
- Any amount or consideration in respect of any trade goodwill reduced by any amount incurred for the purchase of such trade goodwill;
- The gross income derived by an individual from the exercise in Cyprus of any profession or vocation, the remuneration of public entertainers and the gross receipts of any theatrical, musical or other group of public entertainers;
- Directors’ fees and similar remunerations in their capacity as directors of companies considered to be tax resident companies of Cyprus.
PERSONAL TAX RATES
CHARGEABLE INCOME |
CHARGEABLE INCOME |
AMOUNT OF TAX |
ACCUMULATED TAX |
0-19,500 |
Nil |
Nil |
Nil |
19,501-28,000 |
20 |
1,700 |
1,700 |
28,001-36,300 |
25 |
2,075 |
3,775 |
36,301-60,000 |
30 |
7,110 |
10,885 |
Over 60,001 |
35 |
|
|
EXEMPTIONS FROM INCOME TAX
TYPE OF INCOME |
EXEMPTION LIMIT % |
Income from interest |
100 |
Income from dividends |
100 |
Profits from the sale of securities* |
100 |
Lump sum payment on retirement, computation of pension or compensation for death or injuries |
100 |
Capital sums from life insurance or approved provident funds. |
100 |
Profits of a permanent establishment abroad under certain conditions. |
100 |
Remuneration for 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. |
100 |
Remuneration from any office or employment exercised in Cyprus by an individual who was not resident of Cyprus before commencement of his employment, for a period of 3 years commencing from 1st January following the year of commencement of the employment. |
20 or €8,543.01
(lower of) |
Widow’s pension |
100 |
Income from scholarship or other educational endowment |
100 |
*Securities are those listed as per Note 1 of Chapter 1: Corporation Tax.
TAX DEDUCTIONS FROM INCOME
|
DEDUCTION LIMIT (%) |
Contributions to trade unions or professional bodies |
100 |
Rental income |
20% of the rents |
Interest paid in respect of rented buildings |
100 |
Loss of current year and previous years |
100 |
Donations to approved charities |
100 |
Expenditure incurred for the maintenance of a building in respect of which there is in force a preservation order |
Up to € 512.58, €854.30 or
€939.73 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) |
In the case of cancellation of a life insurance policy within 6 years from the day of its issue, a percentage of the premiums, which were previously allowed, is taxable.
• Cancellation within 3 years
• Cancellation from 4 to 6 years |
20
30 |
EXAMPLE OF PERSONAL TAX COMPUTATION
|
€ |
|
|
Salary |
42,000 |
|
|
Rental Income |
5,000 |
|
|
Interest receivable |
300 |
|
|
Dividends receivable |
250 |
|
|
Social insurance contribution |
2,860 |
|
|
Life insurance premiums |
3,200 |
|
|
Insured amount |
40,000 |
|
|
Donations to approved charities |
200 |
|
|
Professional subscriptions |
400 |
|
|
Provident fund contributions |
3.000 |
|
|
Tax Computation |
|
€ |
€ |
Salary |
|
42,000 |
|
Rental Income |
|
5,000 |
|
Dividends receivable (exempt) |
|
- |
|
Interest receivable (exempt) |
|
- |
|
Total income |
|
|
47,000 |
Deductions |
|
|
|
Professional subscriptions |
|
400 |
|
Donations |
|
200 |
|
20% of rental income |
|
1,000 |
1,600 |
Net total income |
|
|
45,400 |
Life insurance premium:
Restricted to 7% of the insured amount (€40,000*7%=€2,800) Provident fund, social insurance contributions and life insurance premiums restricted to 1/6 of the net total income (3,000+2,860+2,800=8,660
Restricted to 1/6 of 45,400)* |
|
|
7,567 |
Chargeable Income |
|
|
37,833 |
Tax Payable |
|
|
|
-First €36.300 |
|
|
3,775 |
-Rest € 1,533 |
|
|
459.90 |
Income tax payable |
|
|
4,234.90 |
Special contribution for Defence |
|
|
|
Dividends receivable €250*17% |
|
|
42.5 |
Interest receivable €300*15% |
|
|
45 |
Rent receivable €5,000-25%=€3,750*3% |
|
|
113 |
Special defence contribution payable |
|
|
200.50 |
- Net total income is equal to total income including dividends and interest less deductions.
|
