Personal Income tax

The Cyprus taxation scheme for individuals is composed of an income tax applied on income earned or accrued in Cyprus on worldwide income. An individual is considered a Cyprus tax resident if he/she spends more that 183 days in the country in any one calendar year. Non Cyprus tax residents are taxed only on the income accrued or derive from sources in Cyprus. 

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.

Personal Income Tax Rates for 2014

Chargeable income

Tax rate

Accumulated tax

     

€

%

€

0 - 19.500

Nil

Nil

19.501 – 28.000

20

1,700

28.001 – 36.300

25

3,775

36.301 -  60.000

60.001 and over                  

30

35

10.885

Foreign pensions from services rendered abroad

Pension income of tax resident individual in Cyprus, from services render abroad is taxed at the rate of 5%. An annual exemption of €3.420 is granted.

Exemptions

The following are exemptions from income tax:

(SDC means Special Defense Contribution)

Type of income

Exemption Limit

Interest

The whole amount but subject to SDC at 15%

Dividends

The whole amount but subject to SDC at 20%

Remuneration from any office or employment exercised in Cyprus by an individual who was not a Cyprus tax resident before the commencement of his employment, for a period of 5 years commencing from 1st January 2012 if the annual remuneration exceeds €100.000.

20% of income with a maximum amount of €8.550 annually

Remuneration from salaried services rendered outside Cyprus for more than 90 days in a tax year to a non-Cyprus employer

The whole amount

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 under certain conditions

The whole amount

Lump sum received by way of retiring gratuity, pension or death or injuries

The whole amount

Capital sums from approved funds (eg. provident fund)

The whole amount

Deposits with Housing Finance Corporation

40 percent of the amount deposited

Capital gains from the sale of immovable property

The whole amount

Profits from the sale of securities

The whole amount


Tax deductions

The following are deducted from income:

Type of Income

Exemption Limit

Donations to approved charities (with receipts)

The whole amount

Contributions to trade unions or professional bodies

The whole amount

Rental Income

20% of rental income

Loss of current year and previous years

The whole amount

Expenditure incurred for a preserved building

Up to €342, €513 or €598 per square meter (depending on the size)

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