By 30 April 2017, salaried individuals that are tax resident in Cyprus and have a gross income exceeding €19.500 must submit their personal tax returns for the year 2016.

An individual is considered to be a tax resident in Cyprus if s/he spends more than 183 days in Cyprus in one calendar year.

The following income tax rates are applicable for individuals:

Chargeable Income € Tax Rate      % Accumulated Tax
0 – 19.500 0 0
19.501 – 28.000 20 1.700
28.001 – 36.300 25 3.775
36.301 – 60.000 30 10.885
Over 60.000 35  

 

Note that the following are some of the items exempt from income tax:

  • 100% of Interest Income (except if the interest arises from the ordinary or closely related to the ordinary business activities of an individual).
  • 100% of Dividend Income.
  • 100% of Profits from the sale of Securities.
  • 100% of Capital payments from approved funds such as life insurance plans or provident funds.
  • 100% of profits from a Foreign Permanent Establishment (under certain conditions).
  • 100% of Remuneration from salaried services rendered outside Cyprus to a foreign employer or foreign permanent establishment for more than 90 days in one tax year.
  • 100% of Cyprus widow’s pension. For amounts over €19,500, there is a taxable flat rate of 20%.
  • 50% of the remuneration from employment in Cyprus by an individual who was not a resident of Cyprus before the commencement of the employment (this applies for 10 years for employments commencing as of 1 January 2012 given that the annual remuneration is greater than €100,000.
  • 20% of the remuneration from employment exercise in Cyprus by an individual who was not a resident of Cyprus before the commencement of the employment.
  • Foreign pensions are taxed at the flat rate of 5% on amounts over €3.420.

The following are some of the items deducted from income tax:

  • 20% of gross Rental Income.
  • 100% of donations / contributions to approved charities (with receipts).
  • Amount invested in approved small and medium sized innovative enterprises (under certain conditions).
  • 100% of loss made in current year and previous five years (if individuals prepare audited financial statements).
  • 100% of contributions made to trade unions or professional bodies.
  • 100% of special contributions of private sector employees, pensioners and self-employed.
  • Social insurance contributions; annual life insurance premiums; provident fund contributions; pension fund contributions; medical fund contributions.

For any further information or for assistance in preparing your mandatory annual tax submissions please contact a member of our team who will be happy to assist you in any way.