Cyprus tax system
Cyprus’ taxation system obliges its tax residents to pay a specific set of taxes, including income taxation on their worldwide income, regardless of their residence status.
Foreigners who spend more than 183 days in the country usually become its tax residents: they pay taxes and receive benefits. The Government of Cyprus has simplified this rule: people who want to become tax residents of Cyprus can now stay in Cyprus for at least 60 days during the tax year instead of 183.
in Cyprus to be a tax resident
The 60-day rule provides for five requirements:
- Do not reside in any other country longer than 183 days.
- Not to be a tax resident of other states during the tax period.
- To carry out any activity in Cyprus, for example, to have a job in Cypriot companies.
- Own residential real estate in Cyprus.
Cyprus provides its citizens and expatriates with excellent taxation policies and incentives. To be a tax resident, foreigners can have a permanent residence by investing in real estate or funds.
A person who is a non-tax resident is only taxed on income arising from sources in Cyprus.
A company can be considered a tax resident when managed or controlled from Cyprus.
Cyprus-tax residents must pay general and foreign taxes on their income worldwide at tax rates ranging from 20—35%, depending on their annual income. If your annual taxable income amounts to €19,500 or less, you are exempt from this tax.
Personal income tax rates
|Taxable income band||National income tax rates|
|€0 to €19,500||0%|
|€19,501 to €28,000||20%|
|€28,001 to €36,300||25%|
|€36,301 to €60,000||30%|
There is a special regime for retirees: 5% of the pension payments if they exceed €3,420 per month.
Taxes on corporate income
Cyprus tax-resident companies are taxed on their income from all sources in the country and abroad. The standard corporate income tax, or CIT, is 12.5%. Non‑Cyprus tax resident companies are exempt from CIT tax.
Taxes for insurance companies. These companies are required to pay corporate tax as other tax-resident companies. However, there is an exception when the corporate tax payable on the taxable profit of a life insurance business is less than 1.5% of the gross premium. In this case, the difference is paid as an additional corporate tax.
Taxes for shipping companies. Fully approved by the EU, the Cyprus Merchant Shipping Legislation provides an exemption from all taxation under the tonnage tax regime of qualifying ship owners and managers.
Value-added tax rates
The value-added tax, or VAT, is charged on the supply of services and goods in Cyprus, the importation of goods into Cyprus, and the acquisition of goods from the EU. The standard VAT rate is 19%.
Cyprus also has a 9% reduced VAT rate on a restaurant, catering services, accommodation, hospitality, and other services.
A 5% reduced VAT rate applies to the renovation and repair of a property.
Property taxes in Cyprus
Stamp duty. This tax is determined depending on the purchase amount:
- stamp duty is not charged for the first €5,000;
- 0.15% for the purchase price from €5,001 to €170,000;
- 0.2% for the purchase price over €170,000.
Property transfer tax. When you buy a property in Cyprus, you must pay a transfer tax to complete the purchase. The Land Registry will assess the market value of the purchased property and charge the buyer transfer fees.
Transfer fees are the following:
- 3% on real estate worth up to €85,000;
- 5% if a property costs from €85,001 to €170,000;
- 8% if a property price exceeds €170,001.
There is a 50% discount on stamp duty, and transfer fees are not chargeable if VAT has been paid.
Services taxes. The Municipality or a Village Council determines the tax and rates for property owners. The cost will depend on the municipality or council where the object is located.
Capital gains tax. A 20% capital gains tax, or CGT, is charged on income from selling immovable properties in Cyprus or shares of companies that directly own real estate objects in Cyprus. This tax only applies to profit from selling an immovable property when the disposal is not subject to income tax.
Special contribution to the defence
The Defense Tax, or a Special Tax Contribution for Defense Purposes, consists of three parts:
- a tax on dividends received in Cyprus and abroad;
- a tax that consists of interest income earned in Cyprus and abroad;
- capital gains from the sale of securities and corporate rights.
A non-domicile tax resident is exempt from paying defence tax.
You can check a tax calendar to pay all taxes on time, be up-to-date, and avoid paying unnecessary penalties.
Tax due dates for individuals and companies
|January 31st||Submission of the Deemed Dividend Distribution declaration||TD623|
|April 30th||Provide payment of premium tax for life insurance companies||TD199|
|May 31st||Employees must provide electronic submission of the revenue for the previous year||TD7|
|June 30th||Pay for Special Contribution for Defence and General Health Contribution for the first six months of the year on rents||TD601|
|July 31st||Provide electronic submission of the previous year on personal tax return||TD1|
|August 1st||Companies and individuals submitting audited financial statements should pay the tax balance for the previous year||IR158|
|December 31st||Pay for a Special Contribution for Defence and General Health Contribution on interest, rental, or dividend income||TD601|
|End of each month||Pay for Social Insurance and General Healthcare Contributions withheld from employees’ emoluments during the last month||TD601|
|Pay tax withheld in the previous month on payments to tax residents who are not citizens of Cyprus within the previous month||TD11|
|By the 10th of the second month following the end of the quarter||Self-employed individuals must submit and pay for their Social Insurance Contributions||—|
|By the 10th of the second month after the end of the VAT period||Submit VAT declarations and payment of VAT amount due||—|
|By the 10th of the month following the end of the VAT period||Submit Intrastat form, or Intra-EU Trade Statistics, electronically||—|
Tax exemptions for non-Cyprus residents
Cyprus’ taxation system offers numerous exemptions and benefits for non-residents on capital gains, employment income, VAT exemptions, and many others.
For example, non-Cyprus residents are exempt from tax on interest, dividends, and royalties in the whole amount. Non-residents are also exempt from income taxes on the sale of securities and capital sums accrued to individuals due to any payments to approved funds.
Valid double taxation treaties
Cyprus has double tax treaties with more than 50 countries. Most of these countries follow the OECD Model Convention, but a tax treaty with the United States is also adapted to the US Agreements.
Complete list of countries that have double taxation with Cyprus
|Egypt||Kyrgyzstan||San Marino||United States of America|
How to obtain permanent residency in Cyprus by investment to become a tax-resident
The Cyprus tax policy is softer than in many countries, so numerous business owners and individuals choose this country as their residence. Participating in the investment program is the fastest way to get a Cyprus permanent residency.
The Government of Cyprus has launched a program that allows foreigners to get permanent residency by investment. The minimum investment amount is €300,000.
Buying a residential property. Foreigners can buy one or two properties for €300,000+ in new buildings. They also have to pay a value-added tax of 19%; if housing is purchased for their own usage, the VAT is 5%.
Investing in commercial real estate. Foreigners can buy one or two commercial objects for €300,000+ in new buildings or the secondary market.
Examples of properties to buy to obtain residency by investment
Buying units of local funds for at least €300,000 and only from collective investment funds of the RAIF, AIF, and AIF LNP types.
Purchasing shares of Cypriot companies for €300,000 and more, which have five employees and make a profit on the island.
Frequently asked questions
Cyprus has the lowest corporate income taxation in the EU for resident companies, which is 12.5%. Non-tax residents do not pay this tax. If your annual taxable income is €19,500 or less, you are exempt from tax on personal income.
Cyprus also has many benefits and tax treaties due to interest, dividends, royalties, and pensions.
Cyprus lost tax haven status. One of the reasons — is the increase in corporate tax rates to 12.5%.
Cyprus’ Taxation System obliges its tax residents to pay a specific set of taxes, including income taxation on their worldwide income, regardless of their residence status. A person who is a non-tax resident is only accessible on income arising from sources in Cyprus.
Cyprus-tax residents pay general and foreign taxes on their income worldwide at tax rates ranging from 20-35%. Companies pay a corporate income tax of 12.5%. There is a special regime for retirees: 5% of the pension payments if they exceed €3,420 per month.
Cyprus-tax residents and companies that operate in Cyprus pay income tax. Non-tax residents are exempt from paying income tax. Retirees provide 5% of the pension payments if they exceed €3,420 per month.
There is a 9% VAT rate applied to accommodation and hospitality services.