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Cyprus taxation overview

Tax residency

There are two main rules that apply from 2017, a 183-day rule when an individual spends more that 183 days in Cyprus; and a 60-day rule when an individual spends at least 60 days in Cyprus but complies with other criteria, e.g. having a permanent accommodation or job in the country.

Personal income tax

Taxable income

Taxable income includes employment, self-employment and business income, rental income less applicable deductions, capital gains, dividend and interest income.

Residents Non-residents
Taxable income Worldwide income Income arising or accruing in Cyprus
Income tax rate Graduated rates from 0% to 35% Graduated rates from 0% to 35%

If any income taxable in Cyprus is also subject to income tax outside Cyprus, then tax payable in Cyprus is minus any foreign tax paid(subject to Double Tax Treaty Agreement between the countries).

Tax rates

TAX BAND 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 higher 35%

Exempt income and deductions

The following income tax exemptions apply:

  • Dividends (full exemption)
  • Interest (full exemption)
  • Remuneration from employment in Cyprus for arriving residents (the lower of 20% or €8,550. For remuneration over €100K 50% exemption applies)
  • Foreign exchange gains not arising from trade in foreign currencies and related derivatives (full exemption)
  • Capital gains on the sale of securities, etc.

The following expenses are deducted from taxable income calculations:

  • Purchase of fixed assets for business
  • Buy-to-rent of buildings
  • Professional membership subscriptions
  • Approved charity donations, etc.

Capital gains tax

The CGT applies to the following at the rate of 20%, subject to deductions:

  • Disposal of real estate in Cyprus, subject to exemptions and deductions
  • Disposal of shares of companies that directly or indirectly own a Cyprus-based immovable property, subject to terms and conditions

Other capital gains, not related to Cyprus-based immovable property, are generally not taxed.

Other taxes

0%

Immovable property tax

Dividend income tax

Interest income tax

Inheritance tax

Gift tax

Special Defence Contributions

SDC is only payable by domiciled residents. Non-tax residents and non-dom residents are fully exempt.

Dividend and interest income is subject to SDC 17% and 30% correspondingly.

2.25% applies to gross rental income without deductions.

Social security contributions

The employee and self-employed only pay to the Social Insurance fund – 7.8% and 14.5% correspondingly.

The employer contributes 7.8% to the Social Insurance Fund, 1.2% to the Redundancy Fund, 0.5% to the Industrial Training Fund and 2% to the Social Cohesion Fund.

A limit of €4,533 applies to an employee’s monthly gross salary.

Immovable property transfer fee

The fee is payable by the buyer at the rate from 3% to 8% depending on the market value of the transferred property.

Stamp duty

Documents relating to Cyprus-based property or other matters – 0% to 0.2% or €0.07 to €20,000.

VAT

VAT is imposed on all goods and services imported from EU and other countries. All exports are tax exempt.

Standard rate is 19%. Reduced rates of 9% or 5% apply correspondingly to restaurant, accommodation and transportation sectors or food, books, hairdressing, construction or refurbishing services, etc.

0% VAT applies to sea vessels, aircrafts and other related services.

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