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Business and taxes

Cyprus tax benefits for residents and non-tax residents

Cyprus has an appealing tax system for both residents and non-tax residents. There is the lowest taxation in the EU for all resident-based companies, which is 12.5%. Non-resident companies are exempt from this tax.

There are also various exemptions: for example, if your annual taxable income amounts to €19,500 or less, you are exempt from personal taxation.

Read the complete guide to taxation in Cyprus, exemptions, and benefits.

What taxes should foreigners pay in Cyprus?

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.

60 days
A foreigner can stay
in Cyprus to be a tax resident

The 60-day rule provides for five requirements: 

  1. Do not reside in any other country longer than 183 days.
  2. Not to be a tax resident of other states during the tax period.
  3. To carry out any activity in Cyprus, for example, to have a job in Cypriot companies. 
  4. 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. 

Personal taxation

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 €19,5000%
€19,501 to €28,00020%
€28,001 to €36,30025%
€36,301 to €60,00030%
€60,000+35%

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.

12.5%
CIT for Cyprus
tax-resident companies

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%.

19%
The standard VAT rate
in Cyprus

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.

Tax calendar

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

DateRequirementsForm
January 31stSubmission of the Deemed Dividend Distribution declarationTD623
April 30th Provide payment of premium tax for life insurance companiesTD199
May 31stEmployees must provide electronic submission of the revenue for the previous yearTD7
June 30thPay for Special Contribution for Defence and General Health Contribution for the first six months of the year on rentsTD601
July 31stProvide electronic submission of the previous year on personal tax returnTD1
August 1stCompanies and individuals submitting audited financial statements should pay the tax balance for the previous yearIR158
December 31stPay for a Special Contribution for Defence and General Health Contribution on interest, rental, or dividend incomeTD601
End of each monthPay for Social Insurance and General Healthcare Contributions withheld from employees’ emoluments during the last monthTD601
Pay tax withheld in the previous month on payments to tax residents who are not citizens of Cyprus within the previous monthTD11
By the 10th of the second month following the end of the quarterSelf-employed individuals must submit and pay for their Social Insurance Contributions
By the 10th of the second month after the end of the VAT periodSubmit VAT declarations and payment of VAT amount due
By the 10th of the month following the end of the VAT periodSubmit 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

AzerbaijanGermanyMaltaSlovakia
ArmeniaGreeceMauritiusSlovenia
AustriaHungaryMoldovaSouth Africa
BelarusIcelandMontenegroSpain
BelgiumIndiaNorwaySweden
BulgariaIranPolandSyria
CanadaIrelandPortugalTajikistan
ChinaItalyQatarThailand
Czech RepublicJerseyRomaniaUkraine
DenmarkKuwaitRussiaUnited Kingdom
EgyptKyrgyzstanSan MarinoUnited States of America
EstoniaLebanonSerbia
FinlandLithuaniaSeychelles 
FranceLuxembourgSingapore 

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.

€300,000
The minimum investment amount for obtaining a permanent residency

You can invest in residential property, commercial real estate, local investment fund units, or Cypriot companies shares. Five years after receiving the residency, you can apply for citizenship.

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. 

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.

Examples of properties to buy to obtain residency by investment 

Taxes in Cyprus for buying a property

This project is located in the area of Limassol, Yermasogeia. The cost of an apartment starts from €555,000.

Buying a villa in the Limassol area of Cyprus to be a tax-resident

This project with a two-level estate is available for purchase. The villa with a swimming pool is located in ​​Mouttagiaka, Limassol.

Frequently asked questions

Does Cyprus have low taxes?

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.

Is Cyprus a tax haven?

Cyprus lost tax haven status. One of the reasons — is the increase in corporate tax rates to 12.5%.

Do expats pay taxes in Cyprus?

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.

How much is income tax 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.

Who pays income tax in Cyprus?

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.

Do you pay hotel taxes in Cyprus?

There is a 9% VAT rate applied to accommodation and hospitality services.

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Cyprus tax benefits for residents and non-tax residents