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Cyprus: Personal Taxation

Income Tax

Income tax is levied on worldwide income. This includes employment income including benefits, profits from business activities, rentals from immoveable property, royalties and pensions received. (Pensions from abroad may be taxed at the rate of 5% for amounts in excess of a designated amount, see below). See Double Tax Treaties for details of Treaty exemptions and reliefs.

Various deductions are permitted, including some in respect of share ownership; there are also personal allowances. Married persons are taxed separately. Non-residents of Cyprus are taxed in Cyprus on employment income (including benefits) that relates to services rendered in Cyprus, profits from business activities carried out through a permanent establishment in Cyprus, rentals from immoveable property situated in Cyprus and pensions deriving from employment undertaken in Cyprus, with the exception of pensions paid from a fund established by the Government or local authority.

Chargeable income (after all allowances) is taxed (from 2008) as follows:


Chargeable Income

Rate

Accumulated Tax

up to €19,500

Nil

Nil

from €19,501 to 28,000 

20%

€1,700

from €28,001 to 36,300

25%

€3,775

from €36,300 to €60,000

30%

€10,885

Above €60,000

35%

 

Pension income is charged at 5% on amounts over €3,420 per annum, but only for non-Cypriots who have no economic activity on the island.

A 'Special Contribution for Defence' rate of 3% applies to the following types of income:

  • interest received by provident funds
  • the profits of semi-governmental bodies
  • rental income received by a Cyprus individual or corporate resident from immovable property (after deducting 25% from the taxable amount)
  • interest received by an individual with a yearly income below €12,000 (at the time of writing)
  • interest received by individuals from Government bonds and Government savings certificates.

Other Special Contribution for Defence rates are as follows:

  • 30% on interest payments not arising from ordinary business activities (from 29 April 2013)
  • 17% on dividends received by individuals in Cyprus.

Certain other special regimes operate for non-resident entertainers, sportspeople and experts. Employees who take up residence in Cyprus and earn in excess of €100,000 per year may claim an exemption from income tax of 50% of their employment income for a five-year period.

 

 

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