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Personal Income Tax

All Cyprus Tax residents are taxed on all income accrued or derived from all sources in Cyprus and abroad.  Individuals who are not Cyprus tax residents are taxed on income accrued or derived from sources in Cyprus only.

 

An individual is considered Cyprus Tax resident if he/she 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.

 

Personal Tax Rates

 

Chargeable Income

Tax rate

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

36.300 – 60.000

30

7.110

10.885

60.000 and above

35

 

 

 

The first €3.420 per annum of any foreign pension is free of tax and the excess over that amount is taxed at the rate of 5%. A person may elect in any year to have his/her pension included in his/her chargeable income so as to utilise personal allowances.

Exemptions

Type of Income

Exemption Limit

  • Interest Income (Notes 1,2)

The whole amount

  • Dividend Income (Note 2)

The whole amount

  • Widows pension granted under the Social Insurance Laws or in accordance with any pension scheme approved under regulations

The whole amount

  • Lump sum received as retiring gratuity, commutation of pension, death gratuity or as consolidated compensation for death or injury

The whole amount

  • Lump sum repayment from life insurance schemes or from approved provident funds

The whole amount

  • Remuneration from any office or employment exercised in Cyprus by an individual who was not resident of Cyprus before the commencement of his employment, for a period of 3 years commencing from 1st January following the year of commencement of the employment

20% of the remuneration

or €8.550 (whichever is the lower)

  • Income from employment that exceeds €100.000 per annum by an individual who was not tax resident of Cyprus prior to the commencement of employment. This exemption applies for the first 5 years of employment and for employments commencing as of 1 January 2012
50% of the remuneration
  • Remuneration from 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

The whole amount

  • Profits of a permanent establishment abroad *

The whole amount

  • Rent of preserved building *

The whole amount

  • Profits from the sale of securities (Note 2)

The whole amount

  • Income from scholarship or other educational endowement
The whole amount
  • Salaries of officers and crew of ships owned by a Cyprus shipping company that sail under the Cyprus flag and operate in international waters

The whole amount

        *under certain conditions  

 

Notes:

  1. Interest income arising in the ordinary course of business, including interest closely connected with the carrying on of the business, is not considered as interest but trading profit and is not exempt
  2. Interest Income not arising from the ordinary business activities and divident income are subject to Special Contribution for Defence. 
  3. The term “Securities” is defined as shares, bonds, debentures, founders’ shares and other securities of companies or other legal persons, incorporated in Cyprus or abroad and options thereon. A circular has been issued by the Tax Authorities in 2008 further clarifying what is included in the term Securities. According to the circular the term includes, among others, options on Securities, short positions on Securities, futures/forwards on Securities, swaps on Securities, depositary receipts on Securities (ADRs, GDRs), rights of claim on bonds and debentures (rights on interest of these instruments are not included), index participations only if they result on Securities, repurchase agreements or Repos on Securities, units in open-end or close-end collective investment schemes). The circular also clarifies specific types of participation in foreign entities which are considered as Securities.

 

Deductions

Type of Income

Exemption Limit

  • Donations to approved charities (with receipts)

The whole amount

  • Contributions to trade unions or professional bodies

The whole amount

  • Loss of current year and previous years

The whole amount

  • Social Insurance, provident fund, medical fund, pension fund contributions and life insurance premiums (Notes 1-3)

Up to 1/6 of the chargeable

income

  • Rental income

20% of rental income

  • Expenditure incurred for the maintenance of a building in respect of which there is in force a Preservation Order (under certain conditions)

Up to €1.200, €1.100 or €700 per square meter (depending on the size of the building)

  • Special Contribution 
The whole amount

 

Notes:

  1. The annual life insurance premium is restricted to 7% of the insured amount
  2. Life insurance policies, in respect to the life of the claimant’s spouse, which were in existence up to the 31 December 2002 and for which the claimant was receiving a tax allowance, will continue to be deductible by the claimant
  3. In the event of cancellation of a life insurance contract within 6 years from the date it was entered into, part of the life insurance premiums already given as an allowance will be taxable as follows:

-   Cancellation within 3 years                 30%

-   Cancellation between 4 to 6 years     20%

 

Gross monthly emoluments

from employment / pension

Government and

semi-government

employees and

pensioners

Private sector employees, self-employed individuals and private sector pensioners (2)(3)(4)

2014

First 1.500

Nil

Nil  (minimum €10)

From 1.501 – to 2.500

2,5%(1)

2,5%

From 2.501 – to 3.500

3,0%(1)

3,0%

Over 3.500

3,5%(1)

3,5%

 

 

Notes:

1. The Special Contribution rate becomes 3%, 3,5% and 4% respectively

for highly ranked civil service officials/ employees within their

respective scale.

2. In the case of private sector employed individuals and private sector

pensions the Special Contribution relates to services rendered

in Cyprus. In the case of self-employed individuals the Special

Contribution relates to any business carried on in Cyprus.

3. For private sector employed individuals the Special Contribution

does not apply, inter alia, on retirement gratuities, on payments from

approved provident funds, on remuneration of the crew of qualifying

ships and on reimbursements of business expenses.

4. In the case of private sector employed individuals the recipient of

the remuneration is liable for half the Special Contribution and the

employer for the other half.



 

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