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Cyprus: Personal Taxation

Income Tax

Income tax is levied on world-wide income. Such income includes employment income (including benefits), profits from a business activity, rentals from immoveable property and 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; and there are personal allowances. Married persons are taxed separately. Non-residents of Cyprus are taxed in Cyprus on employment income (including benefits), in relation to services rendered in Cyprus, profits from a business activity which is carried out through a permanent establishment in Cyprus, rentals from immoveable property situated in Cyprus, and pensions in respect of employment exercised in Cyprus, with the exception of pension paid from a fund established by the Government or local authority.

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

up to EUR19,500

nil

from EUR19,501-28,000 

20%

from EUR28,001-36,300

25%

above EUR36,300

30%

From the 2011 tax year, 35% income tax is payable on income over EUR60,000.

Pension income is charged at 5% on amounts over EUR3,420 pa provided that the individual is neither Cypriot, nor has economic activity on the island.

A 'Special Defence Contribution' applies to certain types of income as follows:

  • 3% on: 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%); interest received by an individual with a yearly income below EUR11,960 (at the time of writing) and interest received by individuals from Government bonds and Government savings certificates.
  • 15% on interest payments (10% prior to August 31, 2011)
  • 20% on dividends received by individuals in Cyprus (17% prior to January 1, 2012 and 15% prior to August 31, 2011).

Interest derived by individuals from provident funds and government bonds will continue to be taxed at 3%, as will interest earned by individuals earning less that EUR12,000 per year.

Under legislation adopted in late 2009, interest received by individuals through business operations will be subject to regular income tax, but not the Special Defence Contribution; non-business interest income will be subject to the SDC, but not to income tax.

Certain other special regimes operate for non-resident entertainers, sportspeople and experts. Employees who take up residence in Cyprus and earn in excess of EUR100,000 per year will be able to claim an exemption from income tax of 50% of their employment income for a five-year period, starting January 1, 2012.

 

 

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