A Comprehensive Guide to Taxes in Cyprus: Simplified

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Our blogs are regularly updated to ensure information is current and accurate.

author's portraitAndreas Nicolaou
7/31/2024

Tax Residency

In order to understand your tax obligations, the first thing to consider is whether you're a tax resident of Cyprus. Tax residency is a way for a country to decide what kind of taxes you must pay there. Think of it as your “home base” for tax purposes. To be considered a tax resident of Cyprus you should meet either the '183-day rule' or the '60-day rule' for the tax year:

183-day rule

To qualify for the 183-day rule, you must stay in Cyprus for at least 183 days in a year. These days do not have to be consecutive. Once you do, you will be considered a tax resident of Cyprus. However, if you spend 183 days in any other country during the year, you will lose your tax residency in Cyprus for that year.

60-day rule

Since 2017, individuals can become tax residents of Cyprus using the 60-day rule. To do so, they must meet all the following conditions:


1Stay in Cyprus for at least 60 days in a year.
2Work in Cyprus, run a business here or be an executive in a Cypriot company.
3Have a permanent home in Cyprus (either rented or owned).
4Not spend more than 183 days in any other single country.
5Not be a tax resident in another country.

Keep in mind that if you stop working or conducting business in Cyprus during the year, you will lose your tax residency.


Applying for 60-day rule In order to become a tax resident of Cyprus under

the 60-day rule, you must first obtain a tax residence certificate. To do that, you must fill out form T.D. 126 and submit it to the Tax Department.

Days in Cyprus

For the purpose of calculating the days of residence in the Cyprus:


1The day of departure from Cyprus is considered a day outside Cyprus.
2The day of arrival in Cyprus is considered a day within Cyprus.
3Arrival in Cyprus and departure from Cyprus on the same day is considered one day within Cyprus.
4Departure from Cyprus and return to Cyprus on the same day is considered one day outside Cyprus.

If you moved to Cyprus to start a business, having your company based and tax-registered in Cyprus doesn't automatically make you a tax resident as an individual. You'll have to meet the requirements for either the '183-day rule' or the '60-day rule' if you want to be a tax resident.


Once you become a tax resident of Cyprus, you'll pay income tax on your income from sources inside and outside Cyprus.



If you're a Cypriot citizen and live here, you don't have to do anything since you're automatically considered a tax resident of Cyprus.

Non-Domicile Status

Domicile refers to the country that an individual treats as their home. Non-Cypriots who become tax residents can claim non-domicile status to get more tax benefits.

More specifically, non-domiciled individuals do not have to pay Special Defence Contributions on their dividends, interest and rental income. But, they still have to pay income tax as well as contributions towards the General Healthcare System.


There are two types of domicile:



Domicile of origin: This is the domicile you receive automatically once you are born.



Domicile of choice: This is where you have your permanent home.


If you are a Cypriot living in Cyprus, you are considered a Cypriot-domiciled individual. However, you will not be considered domiciled in Cyprus if you chose to domicile in another country and were not a tax resident of Cyprus for the last 20 years, even if born in Cyprus.

You will also be considered Cypriot-domiciled if you were a tax resident in Cyprus for 17 out of the last 20 years. This means that if you move out of Cyprus for a few years and return, you cannot claim non-domiciled status, regardless of your domicile of origin.

However, you can claim non-domicile status if you meet the following criteria:

1You have and maintain a domicile of choice (permanent residence) in another country.
2You were not a tax resident of Cyprus for the last 20 years.
3You have obtained Tax Residency and a Tax Identification Code in Cyprus.

Applying for Non-Domicile Status If you meet the requirements to claim

non-domicile status, you can apply by completing the questionnaire T.D.38Qa and form T.D.38 and submitting them to your local Tax Department office. Once approved, you will receive a certificate of non-domicile status.

Social Insurance and General Healthcare System (ΓεΣΥ)

Every person working in Cyprus is required to pay contributions towards Social Insurance and the General Healthcare System (GHS or ΓεΣΥ). Social Insurance is where you get benefits from when you can't work in case of illness, disability, old age, etc. GHS gives you access to medical services, and every permanent resident of Cyprus can use it.

As an Employer

As an employer in Cyprus, you have several obligations regarding social insurance, GHS contributions, and other mandatory contributions for your employees which are calculated based on their salary. As of the 1st January 2024, the minimum monthly wage is €1,000 gross for full-time employees.


ContributionsPer Employee %
Social Insurance8.8%
General Healthcare System (GHS) 2.90%
Redundancy Fund1.2%
Human Resources Development Fund0.5%
Social Cohesion Fund2%

Registration

First, you need to register with the Employers' Register of the Social Insurance Services:


Steps
1Fill out the relevant application form (YKA 1-001).
2Submit it to any Social Insurance District Office or Citizen Service Centre to obtain your Employer Registration Number.
3Create an account on the SISnet platform to pay the contributions for your employees online.

Payment

These payments must be made by the end of the following month for which they are due.

For Example

Contributions for July 2024 must be paid by the end of August 2024.

Tip

Remember that as an employer, you are also required to create an account in the ERGANI platform, using your Employer Registration Number. Through the platform, you must inform the Social Insurance Services of any new hires, employee termination, and other relevant information.


Particularly, as an employer you should maintain a recruitment register, which includes personal information for each employee (serial number, name, ID card number, social insurance number, date of recruitment and date of commencement of employment).


As an Employee

As an employee in Cyprus, where the majority of the workforce is employed by others, it's important to understand how social insurance and GHS contributions work.

Social Insurance

The overall contribution to social insurance is 22.8% of your earnings. However, you don't cover the entire amount yourself. Contributions are divided as follows:

Social InsuranceSalary
Employer8.8%
Employee8.8%
State5.2%

General Healthcare System

Similarly, GHS contributions are divided between yourself, your employer and the state.

General Healthcare SystemSalary
Employer2.90%
Employee2.65%
State4.70%

Understanding Your Gross and Net Salary

Remember, employee contributions are deducted from your gross salary, not paid out of pocket. This means that, for example, when someone says they will pay you a gross salary of €1500 per month, 8.8% of that amount will be deducted for social insurance and 2.65% for GHS.

So on this example:

  • Gross Salary: €1500

  • Social Insurance (8.8%): €132

  • GHS (2.65%): €39.75

  • Net Salary: €1500 - €132 - €39.75 = €1328.25


If you have two jobs, you will be paying these contributions for both.You don't need to worry about making these payments yourself since your employer will take care of them for you.


As a Self-Employed

If you're self-employed in Cyprus, you are responsible for registering and paying your Social Insurance and GHS contributions yourself.

Social Insurance

The overall contribution to social insurance is 21.8% of your earnings, and it is divided between yourself and the state as follows:

Social InsuranceSalary
Self-Employed16.6%
State5.2%

General Healthcare System

Similarly, GHS contributions are divided between yourself and the state.

General Healthcare SystemSalary
Self-Employed4%
State4.70%

Registration

First, you need to register as self-employed with the Social Insurance Services:


Steps
1Fill out the relevant application form (YKA 1-008).
2Submit it to any Social Insurance District Office or Citizen Service Centre to obtain your Social Insurance Number.
3Create an account on the SISnet platform to pay your contributions online.

Earnings Calculation

For purposes of calculating the amount of your contributions, the state bases the calculation on your occupation.

For example:

If you're a shop owner, your estimated minimum weekly earnings are set at €413.22, which amounts to €1652.88 per month.


You can find a list of self-employment categories and their minimum weekly earnings below.


Occupational CategoriesMinimum Weekly Insurable Earnings
Medical Doctors, Pharmacists, Health Professional
- For a time period that does not exceed ten (10) years €443.45
- For a time period that exceeds ten (10) years€896.99
Accountants, Economists, Lawyers and other Professionals -
- For a time period that does not exceed ten (10) years €443.45
- For a time period that exceeds ten (10) years€896.99
Directors (Entrepreneurs), Estate Agents, Wholesalers€896.99
Teaching Professionals (University and Higher, Secondary, primary and Pre-primary, Special Education, Teaching Assistants) -
- For a time period that does not exceed ten (10) years €433.38
- For a time period that exceeds ten (10) years€866.75
Builders and other professions related to construction industry€544.24
Farmers, Dairy and Livestock Producers, Poultry Producers, Fishermen and related workers€302.36
Drivers, Excavator Operators and related workers €433.38
Technicians, Telecommunication Cooperators, Machine Operators€433.38
Clerks, Typists, Cashiers, Secretaries and other workers€433.38
Shop owners/supervisors (Including kiosks, hairdressers, barbers, beauticians)€413.22
Butchers, Bakers, Pastry-cooks, Meat, Dairy-, Fruit and tobacco products makers/preservers and related professionals€332.59
Street Vendors, Mail Carriers, Garbage Collectors, Mining / Stone labourers, Ships' Crews, Underwater Construction Specialists, Riggers and Cable Splicers and Sweepers, Services' Supervisors and Salespersons€302.36
Cleaners, Messengers, Porters, Cleaning Shop Owners€413.22
Draughtspersons, Computer Equipment Operators, Ships' Engineers, Agents and related professionals, Musicians, Magicians€443.45
Persons not classified in any other occupational category€443.45


If you earn less than the minimum amount set by the state, you can apply to have your contributions be based on your actual earnings instead. To do that, fill out and submit form YKA 1-017

to your local Social Insurance District Office.

Payment

Remember that you'll have to make these payments yourself every three months.

Dual Employment

If you are both an employee and self-employed at the same time, such as having a 9-5 job and a side hustle, you need to pay social insurance for both. Many people mistakenly think they don't have to pay for their side hustle if they already pay social insurance through their main employment, but this is incorrect.

Tip

Before starting a side hustle or any new venture, it's best to check with Social Insurance Services about your specific circumstances. Asking ahead of time can help you avoid legal issues in the future. While you can call them or even go there in person, it's better to send your questions via email. Having their written response can be helpful if any misunderstandings arise later on.

Rental Income

Rental income is not subject to Social Insurance contributions. It is however subject to GHS contributions. Regardless of the amount, rental income is subject to GHS at the rate of 2.65% of the gross rental income, and the payment method depends on whether the tenant is an individual or a company. GHS contribution on rental income only applies when the landlord is an individual, if the landlord is a company, they are exempt from paying GHS on rental income.

For Individual Tenants

Where the tenant of a property is an individual, the landlord must file a self-assessment and pay the GHS on the 30th of June for the first half of the year, and 31st of December for the second half of the year. Payments are made through the Tax Portal.

For Company Tenants

Where the tenant is a company or a partnership, GHS on rental income is withheld at the source at a rate of 2.65% of the gross rental amount. This means that the tenant is responsible for deducting this amount from the gross amount of rent and pay the GHS contribution to the Tax Authorities with Form IR614A on the 30th of June for the first half of the year, and 31st of December for the second half of the year. Once again, payments are made through the Tax Portal.

Dividend Income

Dividend income is also subject to GHS at the rate of 2.65%. Companies that pay dividends to their individual shareholders are required to withhold the GHS contribution from the dividends of their shareholders and pay it to the Tax Authorities. Companies must declare these using form TD603 and pay the GHS through the Tax Portal by the end of the month following the month in which the dividends were paid.

For example:

If the company paid dividends to its shareholders in July, they must make the relevant GHS payment by the end of August.

Miscellaneous

Social Insurance contributions are only calculated on an annual income up to €62,868. Any amount you earn over €62,868 will not be considered in these calculations.

For example:

If your annual income is €85,000, your Social Insurance contributions will be based only on €62,868 of your income.


Similarly, GHS contributions are capped at an annual income of €180,000 meaning that any amount you earn over €180,000 will not be considered in these calculations. Officers and Pensioners are also subject to a 2.65% contribution rate for the GHS. You can find more information on the GHS here.

Income Tax

Income tax is money that you have to pay to the government based on how much money you earn. If you are a tax resident of Cyprus, you'll pay income tax on your income from sources inside and outside Cyprus. If you're not a tax resident of Cyprus, you'll only pay income tax on certain income you earn within Cyprus.

Tax Brackets

Income tax in Cyprus is progressive, which means that the more you earn, the more tax you'll have to pay. However, different parts of your income are taxed at different rates.


FromToTax Rate
€0€19,5000%
€19,501€28,00020%
€28,001€36,30025%
€36,301€60,00030%
€60,000 +35%

Total Income

Remember, your income isn't just your salary from your job. You must include all types of income, with only certain exceptions and deductions we'll discuss below.

For example:

Let's say you have a 9-5 office job, you sell handmade candles as a side hustle, and you also have an apartment that you rent out. To calculate your total income you must add your salary + side hustle income + rental income.


Then, after making the applicable deductions and finding your total taxable income you can determine which tax bracket you fall into and how much income tax you need to pay.


However, just because you fall under a specific tax bracket does not mean that you'll pay that percentage on your entire income.

For example:

If your taxable income falls into the 20% tax bracket, you'll only pay 20% on the amount exceeding €19,500 after deducting that amount from your total taxable income.


Say your total taxable income is €23,000, you would subtract €19,500, leaving €3,500. You then pay 20% of €3,500, which is €700.


Exemptions and Deductions

Before making your calculations, you must check if any of your income falls within exempted categories or if any deductions apply. These exemptions and deductions can lower your taxable income and reduce the amount of income tax you must pay.

Exemptions

There are several types of income in Cyprus that are not counted when calculating income tax.


ExemptionsDescription
InterestAny income from interest such as money you earn from bank savings accounts, except when it's part of business operations or related to a collective investment scheme.
DividendsProfits you receive from owning shares in companies are not calculated in income tax. However, this does not mean that they are entirely tax-free. Dividends are taxed at 17% as part of the Special Defence Contribution. But this is only applicable to Cyprus domiciled individuals. If you're non-dom then you only have to pay contributions for the General Healthcare System on your dividends.
Profit from the sale of securitiesSecurities include, but are not limited to, ordinary shares, preference shares, debentures, bonds, options on qualifying securities, futures/forwards on qualifying securities, swaps on qualifying securities, depositary receipts on qualifying securities, and participations in open-end or closed-end collective investment schemes.
Pensions and Special Relief GrantsPensions received by retired individuals as well as special relief grants under law (N. 114/1988).
Foreign Exchange GainsGains from foreign exchange differences (realised and/or unrealised). However, this does NOT include gains resulting from trading in currencies or currency derivatives. Read more about it here.
Scholarships and Educational GrantsIncome from scholarships or educational grants for students.
One-Time PaymentsLump sum payments for retirement, pension conversion, death, or bodily injury compensation as well as income from life insurance schemes and other approved funds.
Non-Residents Starting EmploymentIf you're not a Cypriot resident and come to Cyprus to work you can get a 20% tax exemption for 7 years. If you're a high earner you can get a 50% exemption. If your income is over €55,000 a year, this exemption can last for up to 17 years, while if your income is over €100,000 a year then that tax exemption can last up to 10 years.

Deductions

There are also a number of deductions you can claim that can potentially put you in a lower tax bracket or simply reduce the overall amount of tax you must pay.


If you are self-employed/sole-trader then you can also deduct any expenses used entirely for generating income for your business.


You can also claim Wear and Tear allowances for your business. You can see a list of them here.


DeductionsDescription
RentsIf you own property which you rent out, you can deduct 20% of your income from rent. For example, if you earn €10,000 a year from renting out your property, you will only pay taxes on €8,000 instead of the full €10,000.
Interest from Purchasing Rental PropertyIf you take out a loan to buy a property that you plan to rent out, you can deduct the interest you pay on that loan.
Interest on Business AssetsInterest on loans for acquiring assets used in the business is also deductible.
Contributions towards Social Insurance and other fundsYou can deduct contributions you have made towards Social Insurance GHS, Life Insurance premiums, pension funds and other approved medical and provident funds. This means that you can combine all the amounts you have given throughout the year to the abovementioned funds and deduct them from your income and thereby lowering your taxable income. However, this amount cannot exceed 20% of your income. For example, say your income for the year was €50,000. €4,400 went towards social insurance, €1,325 went towards GHS and another €6,000 went towards your life insurance. Although the total amount comes to €11,725, you can only deduct €10,000 (20% of your income), making your taxable income after all the allowed deductions to €40,000.
Investment in Innovative Small and Medium EnterprisesYou can deduct up to 50% of your taxable income if you invest in an innovative small or medium-sized business with a maximum deductible amount of €150,000 per year. There is a list of criteria to be met in order to claim this tax deduction and it is available until the end of 2026.
DonationsIf you have made donations to approved charities, you may deduct those amounts from your taxable income, provided that you have receipts.
Trade UnionsYou can also deduct any amounts you have given towards trade unions or other professional associations.
Business Entertainment ExpensesBusiness entertainment expenses (including any kind of hospitality) can be deducted, but only if the total amount of these expenses is less than or equal to 1% of the business's gross revenue for the tax year, with a maximum limit of €17.086.
Research and Development ExpensesExpenses on scientific research and research and development that are recognized under international accounting standards and incurred by a business owner who owns the intangible asset resulting from such expenses are deductible.
Audio-visual industry If you're involved in making movies, TV shows, or similar audiovisual projects, you can reduce your income tax. You can lower your taxable income by up to 50%, but this reduction can't exceed 35% of the approved expenses for making the film or show.

Keep in mind that if you are a self-employed individual, there are certain expenses that you cannot deduct. You can see a list of them here.

Income Tax Calculation Example

To better understand how income tax is calculated in Cyprus, I'll lay down a practical example using the scenario of having a full-time office job, selling handmade candles as a side hustle, and earning rental income from an apartment with some made up figures.

For example:

Annual Income Components:


  • Salary as an employee: €18,000

  • Side Hustle income: €3,000

  • Rental income: €7,000


1. Salary Income:


Gross Salary: €18,000


Deductions:

  • Social Insurance Contribution: 8.8% of €18,000 = €1,584

  • GHS: 2.65% of €18,000 = €477

  • Taxable Salary Income: €18,000 - €1,584 - €477 = €15,939


2. Side Hustle Income:


If you are both an employee and self-employed at the same time you'll have to pay Social Insurance and GHS for both.

Your side-hustle will be regarded as self-employment income for the purposes of Social Insurance and GHS and as such, your contributions will be calculated based on the estimations of the state which you can find here.

However, assuming that you apply to have your contributions based on your actual earnings using form YKA 1-017, your deductions will look like this:


Gross Self-Employment Income: €3,000


Deductions:

  • Social Insurance Contribution: 16.6% of €3,000 = €498

  • GHS: 4% of €3,000 = €120

  • Taxable Self-Employment Income: €3,000 - €498 - €120 = €2,382


3. Rental Income:


As part of the applicable deductions. You can deduct 20% of your rental income as such:


Gross Rental Income: €7,000


*(Rental Income is also subject to Special Defence Contribution for Cypriot domiciled persons at a rate of 3% on 75% of the gross rental income, but this is not deductable as part of income tax calculations. Read more about it here.)


Deductions:

  • Rental Deduction: 20% of €7,000 = €1,400

  • GHS: 2.65% of 7,000 = €185.5

  • Taxable Rental Income: €7,000 - €1,400 - €185.5 = €5,414.5


4. Total taxable income = €15,939 + €2,382 + €5,414.5 = €23,735.5


The total taxable income falls under the the 20% tax bracket only, so we calculate the tax like this:


€23,735.5 - €19,500 = €4,235.5


€4,421 x 20% = €847.1


  • 0 - 19500 0% - 0

  • 19500 - 28000 20% - €847.1

  • 28000 - 36300 25% - 0

  • 36300 - 60000 30% - 0

  • 60000+ 35% - 0


Total Income Tax = €847.1


5. Final Calculation


  • Total Gross Income - €28,000
  • Total Deductions - €4,264.5
  • Total Taxable Income - €23,735.5
  • Total Income Tax = €847.1
  • *Total Special Defence Contribution - €157.5 (included to get an accurate net income)

Net Income = €23,735.5 - €847.1 - €157.5 + €1,400 (Rent Previously Deducted)= €24,130.9


You can calculate your income tax using our tax calculator.

Registration, Returns and Payment

Registration

As an individual, to submit your tax returns and pay your income tax, you have to get a Tax Identification Number. To do that:


StepsRegistration
1Register to the (Tax For All (TFA) Taxpayer Portal) on the Tax Department's website.
2Receive your TIN and User Access Codes for TaxisNet via email.
3On first login on TaxisNet, change your password and optionally your username.

Tax Returns

From 2020 and onwards, all individuals who have taxable income are generally required to submit personal income tax returns every year. This obligation applies even if, after deductions, you are not liable to pay any income taxes.


However, the Council of Ministers can issue a decree each year that exempts individuals whose gross income does not exceed €19,500 from the obligation to submit a tax return.


In the last few years, the Council has issued such decrees, exempting these individuals. Nonetheless, there is no guarantee that this exemption will be issued every year, so you should be aware of this and check annually whether you must submit tax returns.


The deadline for submitting your tax returns for 2023 has been extended to the 31st of October 2024.


Tax returns are submitted online through TaxisNet.


The deadline is the 31st of July of the following year.

For example:

Your tax returns for 2024 must be submitted by the 31st of July 2025.


Multiple Income Sources

Suppose you are both an employee and self-employed, meaning that you have income from a salary as well as regular income from a self-employed business. In that case, you must complete both an income tax return as an employee as well as an income tax return as a self-employed person.


You can find a detailed guide on how to complete your income tax return here.

Tax Payment

Once you have submitted your tax returns, you will then have to pay the applicable taxes, if any.


StepsPayment
1Tax Payments are made through the Tax Portal .
2Use your TaxisNet username and password to log in.
3The tax statement is automatically generated based on your tax returns.
4Pay the amount due.
5Payment deadline: 31st July.

You can find a detailed guide on how to pay your income tax here .

Employees - PAYE (Pay As You Earn)

Employees whose net salary is over €19,500 and are therefore subject to income tax, don't have to pay it themselves.

Instead, there is the PAYE (Pay As You Earn) system in Cyprus, where income taxes owed by employees are paid directly through their employers. At the beginning of each year, employees must complete the form T.D.59A, detailing all earnings and personal allowances, and give it to their employer.


Using the information provided in that form, the employer can calculate your tax obligation.
Each month, the employer will deduct the appropriate amount of tax from your salary and pay it to the Tax Department on your behalf. PAYE payments must be made by the end of the following month for which they are due.

For example:

Tax deducted for July 2024 must be paid by the end of August 2024.


However, this does not mean that you're not required to submit tax returns. Until the 31st of July each year, employees must file their tax returns to confirm they've paid the correct amount of income tax. If more tax is owed, they pay the difference; if they overpaid, they receive a refund.

Self-Employed Provisional Tax Payment

If you're self-employed and you have income other than salaries, dividends, pensions and interest, such as profits from your sole trader business or rental income, you are required to pay provisional tax, which involves paying your taxes in advance based on your estimated income for the year.


This is also applicable to employees who have income other than their salary from employment, such as rental income. Provisional Tax payment should be made in two equal instalments on the 31st of July and the 31st of December.

For example:

If you're a freelancer and you estimate that your net income (after deductions) for 2025 will be €23,000 then you'll have to pay €700 divided in two equal instalments on the 31st of July and the 31st of December in provisional tax.


Wrong Estimations

In case that, during the year you realise that you have either overestimated or underestimated your income for the year then you can submit a revised provisional tax calculation by the 31st December through the Tax Portal.


Underestimation

However, if your initially declared taxable income was less than 75% of your actual income for the year and you haven't submitted a revised tax calculation by December 31st, you will be liable to pay a 10% fine on the difference between the final tax due and the provisional tax paid.


For example:

If you estimated that your net income for 2024 was €23,000 but your actual income at the end of the year came up to €40,000 you'd have to pay a fine.


That's because 75% of €40,000 is €30,000, and anything below this amount would make you liable for the fine.


Difference between the final tax due and the provisional tax paid:


Final tax due:€4,885

  • Provisional tax paid: €700

  • Difference: €4,885 - €700=€4,185

10% fine on the difference:

  • 10% of €4,185 = €418.50

Since €700 was already paid as provisional tax, you would need to pay the remaining difference of €4,185 plus an additional fine of €418.50 for underestimation, totalling €4,603.50.


Overestimation

On the contrary, if you overestimated your taxable income and ended up paying more provisional tax than you owed, you can claim a refund for the excess tax paid.

High Income Self Employed Individuals

Self-employed individuals whose annual turnover exceeds €70,000 must prepare audited financial statements. Also the tax returns date of submission is the 31 March of the second year following that tax year.

For example:

The tax return for the year 2024 must be submitted by 31 March 2026. In other words, 15 months after the end of a given tax year.

Cryptocurrency and FOREX Tax

Cryptocurrency Taxation

Due to the lack of crypto specific laws in Cyprus and the EU, there is uncertainty regarding the taxation of cryptocurrency investments and trading in Cyprus, and how such activities are taxed, if at all.


However, based on general principles of taxation in Cyprus as well as communications with Tax Department Officials it is clear that cryptocurrency activities are generally categorised into two types for tax purposes:

Investment

If you purchase cryptocurrencies with the intention of holding them as a long term investment (one-off transaction) then you will not be subject to income tax for any gains you make from this investment. However, this is something you should be able to prove and the tax department will assess whether or not your purchase qualifies as a one-off transaction based on several factors.

Trading

In case where you are actively trading cryptos then any profits you make will be calculated as part of your income and subject to income tax.


Whether or not the Tax Department considers your activity as trading depends on several factors such as profit seeking motive, number of transactions, interval between purchase and sale and others. So to be considered as actively trading cryptos does not necessarily solely include buying and selling everyday to make a profit off of short-term market fluctuations (day-trading).


It is enough that you make more than one purchase or exchange one coin for another and generally position yourself so that your portfolio grows over time. Since there are no specific laws or guidelines from the tax department in Cyprus that explicitly exempt cryptocurrency trading from income tax, general principles of taxation appear to be applicable.


Trading as an Individual

If you are trading cryptocurrencies as an individual in Cyprus, any profits you gain will be added to your taxable income. These profits will be taxed based on the personal tax rates applicable in Cyprus.


As such, you must declare your annual crypto profits in your tax returns and pay the applicable tax if you're over the threshold. You can read more on income tax here.


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


And since profits resulting from crypto trading are to be calculated as part of your income, they'll also be subject to Social Insurance and General Healthcare System (GHS) contributions.


Since trading will be regarded as self-employment income, you will have to pay 16.6% of your income for Social Insurance and 4% for GHS. You can read more on Social Insurance and GHS here.

Trading as a Company

If you're not trading as an individual and have incorporated a company under which you perform all your cryptocurrency trading activities then the company will be taxed on 12.5% of the profits. You can read more on corporate tax here.


As a shareholder, you can receive company profits through dividends, which are exempt from income tax in Cyprus. However, if you are a Cypriot domiciled individual, these dividends are subject to Special Defence Contribution (SDC) at a rate of 17%. You can read more about it here. If you are a non-domiciled individual, you will not be required to pay any SDC on your dividends. You can read more on non-domiciled status here .

Foreign Exchange (FOREX)

The law is more clear on the taxation of foreign exchange. Any profit resulting from exchange rate differences due to currency fluctuations is tax-neutral in Cyprus. This means that gains or losses from changes in exchange rates are not subject to income tax.

For example:

Let's say you have $1,000 in your bank account and one day the exchange rate changes, making the dollar worth more than when you originally bought it. This means that you can exchange your dollars for more euros than before. Simply put, you won't have to pay income tax on this increase in value whether such gain is realised or not.


This exemption does not apply to profits made from trading currencies. Many people reading information online are confused by this and think that Forex trading is not taxed. This is incorrect.


If you're an active trader and you primarily buy and sell currencies with the aim of making a profit from short-term fluctuations in currency values then your profits will be taxed normally under income tax. The tax rates will be the same as those discussed above, depending on whether you are an individual or a company.

Capital Gains Tax on Trading

A common misconception is that trading profits are subject to capital gains tax. However, this is not the case.


Capital gains tax is only applicable to profits from the sale of property in Cyprus and the sale of shares of Companies who own property in Cyprus.


So, if you're trading in cryptocurrencies or in foreign exchange, you do not have to worry about capital gains tax. You can read more on capital gains tax here.

Corporate Tax

Corporate tax is a tax that businesses pay on their profits. It's like income tax for companies. If a company makes money, it has to pay a percentage of that money to the government as tax. Cyprus has one of the lowest Corporate Tax rates in Europe at 12.5% on profits.

Tax Residency for Companies

The Tax Residency of a company determines where that Company must pay its taxes. There are two ways to show that a company is tax resident of Cyprus:


  • The company is managed and controlled from Cyprus


  • A company that has been registered in Cyprus will by default be considered a tax resident of Cyprus provided it is not a tax resident in any other country.


It's important to know if your company is a tax resident of Cyprus since a Cyprus tax resident company is taxed on its income from all sources, both within and outside Cyprus. On the other hand, a non-Cyprus tax resident company is taxed only on its income from sources within Cyprus.

Exemptions and Deductions

Before calculating corporate income tax, it's important to determine if any of the company's income falls within exempted categories or if any deductions apply. These exemptions and deductions can lower taxable income and reduce the amount of corporate income tax the company must pay.


Since the corporate tax rate is 12.5%, the company will pay this percentage on its profits, not including exempted income and after applicable deductions have been made.

Exemptions

There are several types of corporate income in Cyprus that are not counted when calculating corporate income tax. These exemptions are the same as those applicable to individual income tax, but the following are specifically relevant to companies:


ExemptionsDescription
InterestIf a company in Cyprus earns some interest from money kept in a savings account, this will not be calculated as taxable income. However, if the company earns interest as part of its regular business activities, this interest is treated as regular business income and subject to corporate income tax.
DividendsWhen a company in Cyprus receives dividends (profits from shares in other companies), these dividends are usually exempted from corporate income tax. However, if the company that is paying the dividends deducts those dividends from its income to reduce its tax in its own country, then the Cyprus company will not be able to claim the tax exemption and the dividends will be taxed normally.
Profit from the sale of securitiesProfits of Companies trading in securities are tax exempt. Securities include, but are not limited to, ordinary shares, preference shares, debentures, bonds, options on qualifying securities, futures/forwards on qualifying securities, swaps on qualifying securities, depositary receipts on qualifying securities, and participations in open-end or closed-end collective investment schemes.
CharitiesIncome of religious, charitable, or public educational institutions.
Foreign Exchange GainsGains from foreign exchange differences (realised and/or unrealised). However, this does NOT include gains resulting from trading in currencies or currency derivatives. Read more about it here.
Non-profit organisationsNon-profit companies promoting art, science, or sports.

Deductions

Expenses used entirely for generating income for the business which can be supported by documentation are deductible when calculating a company's taxable income for Corporation Tax. These deductions include the following:


DeductionsDescription
Repair and Maintenance ExpensesDeductions are allowed for amounts spent on the repair of buildings, machinery, installations, and vehicles, or for renewing, repairing, or modifying any tools, or other objects used for earning income for the company.
Salaries and ContributionsSalaries of Employees are not deductible if the the relevant contributions have not been paid in the year that they are due, read more here.
Bad DebtsBad debts are amounts of money that a business is owed but can't collect from its customers. If a business can prove to the tax authorities that these debts became uncollectible during the tax year and were officially written off in the books, it can deduct these amounts from its taxable income. However, if any of these previously written-off debts are later collected during the same year, that collected amount must be included as income for that year.
Research and Development ExpensesExpenses on scientific research and research and development that are recognized under international accounting standards and incurred by a business owner who owns the intangible asset resulting from such expenses are deductible.
Acquisition and Development of Intangible AssetsExpenditures for acquiring or developing intangible assets such as patents, copyrights, and trademarks, are deductible. These capital expenses are spread over five years for tax purposes.
Donations to Educational and Charitable CausesDonations made for educational, cultural, or charitable purposes in Cyprus, local authorities, or approved charitable institutions are deductible. However, if a loss is incurred in the year of the donation, the loss amount up to the donation amount cannot be carried forward or offset against future income.
Interest on Business AssetsInterest on loans for acquiring assets used in the business is deductible.
Education Fund ContributionsContributions to an approved fund for the education and maintenance of individuals attending educational institutions are deductible.
Profits from Intangible Assets80% of eligible profits from eligible intangible assets can be deducted. If a loss occurs instead of a profit, only 20% of the loss can be offset and carried forward.
Business Entertainment ExpensesBusiness entertainment expenses (including any kind of hospitality) can be deducted, but only if the total amount of these expenses is less than or equal to 1% of the business's gross revenue for the tax year, with a maximum limit of €17.086.
Audio-visual industry If a company in Cyprus is involved in making movies, TV shows, or similar audiovisual projects, it can reduce its taxable corporate income tax. The company can lower its taxable income by up to 50%, but this reduction can't exceed 35% of the approved expenses for making the film or show.


Wear and Tear Allowances

Wear and tear allowances or capital allowances in Cyprus are tax deductions businesses can claim to account for the depreciation of their assets such as buildings, machines or tools. These are calculated as a percentage on the cost of acquisition of the asset.

For example:

Say you bought an apartment to rent out for €100,000, and the allowance is 3%, you can deduct €3,000 every year (for 33 years) from your taxable income to account for its loss of value.


So, if your business owns any of the assets in the list below, you can claim a deduction every year based on the percentage of allowance.


BuildingsRate %
Commercial Buildings (for 33 years)3%
Hotels, Industrial and Agricultural Buildings (for 23 years)4%
Hotels, Industrial and Agricultural Buildings Bought Between (2012-2018)7%
Metallic Frame of Greenhouses 10%
Wooden Frame of Greenhouses33.3%


When a commercial or industrial building is sold, the new owner can continue to claim tax deductions for the building's depreciation based on its original cost, for the remaining years of its usage duration.


The usage duration for tax deduction purposes is 33 years for all buildings, except for industrial buildings and hotels, which have a usage duration of 25 years.

For example:

Say you buy an apartment for rental purposes in 2024 where the original owner bought it in 2000 for €100,000. This leaves you 9 years to claim the remaining depreciation as the new owner.


The acquisition price is the original price, not the price you bought it in 2024. Given a depreciation rate of 3% per year, you can deduct €3,000 (3% of €100,000) annually for the next 9 years.


Plant and MachineryRate %
Fork lifts, excavators, loading vehicles, bulldozers and oil barrels25%
Motor vehicles of all types except saloon cars20%
Personal computers (hardware) and operating software20%
Application software - up to €1.709100%
Application software - over €1.70933 1/3%
Plant and machinery used in agriculture15%
Plant and machinery; Furniture and fittings10%
Plant and machinery, Furniture and fittings (If acquired between 2012 - 2018)20%
Tools33.3%

OthersRate %
Armoured Motor Vehicles (e.g. used by Security Services); Specialised Machinery for the laying of Railroads (e.g. Locomotive engines, Ballast wagons, Container wagons and Container Sleeper Wagons)20%
New Airplanes; New Helicopters; New cargo vessels8%
Sailing vessels4.5%
Motor Yachts; Steamers, tugs and fishing boats; New passenger vessels6%
Shipmotor launches12.5%
Wind power generators and photovoltaic systems10%

Non-Deductible Expenses

There are however, certain expenses that cannot be deducted from your business's income.


Non-Deductible ExpensesDescription
Personal and Commuting ExpensesYou cannot deduct expenses related to your personal life or commuting from home to work.
Rent for Self-Owned Buildings Used for BusinessYou cannot deduct rent for buildings you own and use for your business.
Personal Payments of Interest or Fees on CapitalYou cannot deduct payments of interest or fees on capital paid to yourself.
Cost of Goods Used PersonallyYou cannot deduct the cost of goods taken from your business for personal use.
Non-Business ExpensesYou cannot deduct expenses that are not solely for earning business income.
Withdrawn or Used CapitalYou cannot deduct any amount of capital that is withdrawn or used as capital.
Improvement and Alteration ExpensesYou cannot deduct expenses for improvements, modifications, or additions to your property.
Recoverable Amounts Through Insurance or IndemnityYou cannot deduct amounts that can be recovered through insurance or indemnity contracts.
Non-Income Related Rent or Repair CostsYou cannot deduct rent or repair costs not related to earning income.
Tax PaymentsYou cannot deduct amounts paid or payable as taxes under the applicable tax laws.
Voluntary ExpensesYou cannot deduct voluntary expenses unless specifically allowed by law.
Business Entertainment and HospitalityYou cannot deduct business entertainment expenses if they are more than 1% of the company's gross revenue and up to €17.086.
Private Vehicle ExpensesYou cannot deduct expenses related to a private motor vehicle.
Professional Tax PaymentsYou cannot deduct amounts paid or payable related to professional tax.
Interest on Private Vehicle or Non-Business AssetsYou cannot deduct interest on the cost of a private vehicle or assets not used in the business, except after seven years of purchase.
Excessive Borrowing Costs for CompaniesCompanies cannot deduct borrowing costs exceeding 30% of taxable income before interest, taxes, deductions, and additions, with some exceptions for group companies and specific conditions.


Losses Carried Forward

If a business in Cyprus loses money in a given year, it can use that loss to reduce its taxable income for the next five years. This means that if the business makes a profit in any of the next five years, it can subtract the initial loss from that profit to lower the amount of income that is subject to tax.

For example:

If your company lost €10,000 in 2023 and then makes a profit of €15,000 in 2024, you can deduct the €10,000 loss from 2023, from your €15,000 profit from 2024.


This would result in your company paying only €5,000 in corporate income tax.


However, this is not applicable in case there is a change of ownership of the company and the business activities of the company change substantially.

Group of Companies

Additionally, if two companies are part of the same group (one owns at least 75% of the other or they are both 75% owned by a third company), one company's losses can offset the other's profits to reduce taxes.

Partnerships and Sole Traders

Another situation when someone can carry forward their losses in Cyprus is in case of a partnership or a sole trader transferring their business to a company. When this happens, the losses of the partnership/sole trader can be carried forward into the new company, reducing future taxable profits.

Registration, Returns and Payment

Registration

Every Company in Cyprus is required to register with the Tax Department and obtain a Tax Identification Number (TIN) within 60 days from the date of its incorporation. The process is the same as registering as an individual:


StepsRegistration
1Register to the (Tax For All (TFA) Taxpayer Portal) on the Tax Department's website.
2Receive your TIN and User Access Codes for TaxisNet via email.
3On first login on TaxisNet, change your password and optionally your username.

Tax Returns

All companies in Cyprus are required to submit Tax Returns regardless of their income.

The submission deadline for tax returns for a given year is the 31st of March of the second year following that tax year.

For example:

The tax return for the year 2024 must be submitted by 31 March 2026. In other words, 15 months after the end of a given tax year.


The submission of your company's tax returns is made online through TaxisNet.


Provisional Tax Payment

Companies in Cyprus have to pay provisional tax on each year's taxable profit in two equal instalments on the 31st of July and the 31st of December. Provisional taxes are essentially an early payment of your company's taxes based on a self-estimation of the profits of your company in the coming year.

For example:

If you estimate that your company will make a profit of €40,000 in 2024, then your provisional tax for the year would be €5,000 (€40,000 x 12.5%).


You'd have to pay €2,500 on the 31st of July and the remaining €2,500 on the 31st of December.


Wrong Estimations

If at any point before the 31st of December you realise that you have either overestimated or underestimated your company's profits for the year then you can submit a revised provisional tax calculation by the 31st of December through the Tax Portal of the Tax Department and adjust the payment of the provisional tax accordingly.


Final Tax Payment

After the year ends and you've calculated your actual profits and realise that you actually made more profit than estimated then you must make an additional payment of the remaining tax due by August 1 of the following year.


For example:

If you estimated a profit of €40,000 but at the end of the year you realise you actually made a profit of €45,000, then you'd have to make an additional payment of €625 to settle your corporate tax liability.


Significant Underestimation

However, if your initially declared profit was less than 75% of your actual profit for the year and you haven't submitted a revised tax calculation by December 31st, your company will be liable to pay a 10% fine on the difference between the final tax due and the provisional tax paid.


For example:

If you estimated that your company's profit for 2024 was €40,000 but your actual profit at the end of the year came up to €60,000 you'd have to pay a fine.


That's because 75% of €60,000 is €45,000, and anything below this amount would make you liable to the fine.


Difference between the final tax due and the provisional tax paid:

  • Final tax due: €60,000 x 12.5% = €7,500
  • Provisional tax paid: €5,000
  • Difference: €7,500 − €5,000 = €2,500
  • 10% fine on the difference: 10% of €2,500 = €250

Overestimation

On the contrary, if you overestimated your taxable income and ended up paying more provisional tax than you owed, you can claim a refund for the excess tax paid.

Tip

Cypriot Law requires that an independent registered auditor in Cyprus audits the financial statements of your company. However, if you're a small business, you might be exempt from undergoing a statutory audit.


Specifically, if your company's net annual turnover does not exceed €200,000 and the total value of its gross assets does not exceed €500,000, then you can opt for a review by an auditor instead of a full statutory audit, which can save you costs.


Special Defence Contribution

Tax residents of Cyprus that are also domiciled in Cyprus that receive income from dividends, interest and rents are required to pay the Special Defence Contribution (SDC). In essence, the SDC is a tax designed to raise money for the national defence of Cyprus.


Non-domiciled individuals are exempt from SDC. You can read more on non-domicile status here.

Dividends

Although dividends are exempt from income tax, they are not tax free. There is a 17% SDC tax on profits distributed by companies to their shareholders. However, different conditions apply depending on whether the shareholder is an individual or a company.


Dividends Received by Individuals

Individuals who are shareholders in a Cyprus company must pay the 17% SDC tax on the dividends they receive. This is also applicable if the dividends received are coming from abroad.


Dividends Received by Companies

If a company in Cyprus receives dividends from another company in Cyprus, it doesn't have to pay the 17% SDC tax on these dividends. However, this exemption applies only if the dividends are distributed within 4 years from the end of the year the profits were earned. After 4 years, the 17% SDC tax applies.

For example:

Company A is a shareholder of Company B. In 2024, Company B earns profits. If Company B distributes these profits as dividends to Company A from 2025 until 2028, then Company A will not pay any SDC tax.


But if Company B distributes these profits as dividends to Company A after 2028, then Company A will be liable to pay the SDC tax.


This exemption to payment of the SDC on dividends received by companies is also applicable to dividends received by a company abroad. This means that a company in Cyprus that is a shareholder in a foreign company, generally won't be required to pay the SDC on the dividends received.


However, the exemption does not apply if the following conditions are met:


  • The foreign company earns more than 50% of its income from investments (like stocks, bonds, etc.), and

  • The foreign company pays significantly less tax on its income compared to what the Cypriot company would pay in Cyprus.


Disposal of Assets

Keep in mind that if a company gives a company asset (like a property) to a shareholder or their close family for free or at below market price, it's still considered as a dividend and is subject to the SDC.

Deemed Dividend Distribution

An important aspect of the SDC to have in mind is that when a company in Cyprus makes a profit, it is assumed that it has distributed 70% of the profits as dividends to its shareholders within two years from the tax year which the profits arise from, which means that the shareholders of the company will be taxed on those “deemed dividends” even if they haven't actually received any money.


The company is then responsible to pay the SDC on those “deemed dividends” on behalf of the shareholders and can then charge it on the shareholders.

For example:

Let's say you are the sole shareholder of a company in Cyprus that made a profit of €10,000 in 2022.


Assuming that the company hasn't paid any dividends to you for that year until 2024, it will be deemed by the Cypriot tax authorities that the company has paid you €7,000 in dividends for the profits of 2022.


The company will then have to pay €1,190 (7,000 x 17%) towards the SDC on your behalf.


Payment

Dividends

Companies that pay dividends to their individual shareholders are required to withhold the SDC from the dividends of their shareholders and pay it to the Tax Authorities. Companies must declare these using form TD603 and pay the SDC through the Tax Portal by the end of the month following the month in which the dividends were paid.

For example:

If the company paid dividends to its shareholders in July, they must make the relevant SDC payment by the end of August.

Deemed Dividends

Companies are required to submit the Declaration of Deemed Dividend Distribution (TD623) by the 31st January of the third year after the tax year the profits relate to.

For example:

For example, SDC for deemed dividends from 2022 must be made by the 31st of January 2025.


Alongside paying SDC on deemed dividends, companies must also pay GHS on these deemed dividends on the same date. Payments are made through the Tax Portal.


Interest

Interest is the return on investment when money is saved or invested. If you live in Cyprus and earn interest (with some exceptions), you'll be taxed 17% on that interest.


However, interest from everyday business activities is not subject to SDC. What this means is that when a business such as a bank earns or pays interest as part of its everyday activities, that interest is considered normal business interest and the bank is not required to pay the SDC on that interest.


Additionally, if your total annual income (including interest) is €12,000 or less, you can get a refund for any SDC that you paid (or was withheld from your income) over 3%.


Payment

SDC on interest must be withheld and paid to the Tax Authorities using form TD602 through the Tax Portal by the end of the month following the month in which the interest was paid.

For example:

For interest payments made in July, the applicable SDC must be paid by the end of August.

Rental Income

In addition to rental income being subject to income tax, it is also subject to the SDC. Specifically, the law imposes a 3% tax on 75% of the gross rental income.

For example:

Let's say you own an apartment and you rent it for €1000 a month, which comes out to €12,000 a year. You're only subject to paying SDC on 75% of your gross rental income, being €9,000.


Therefore, you'll have to pay (9,000 x 3%) €270 per year towards SDC.

Payment

Regardless of the amount, rental income is subject to SDC. The method in which payment of the SDC is made is solely dependent on whether the tenant of your property is an individual or a company.

For Individual Tenants

If your tenant is an individual, you must do the following as the landlord:


StepsRegistration
1File a self-assessment on TaxisNet
2Payment deadline: 30th of June for the first half of the year, and 31st of December for the second half of the year.
3Tax Payments are made through the Tax Portal .

For Company Tenants

If the tenant is a company or partnership, they must withhold SDC at a rate of 3% on 75% of the rent from the gross rental amount. This means that the tenant is responsible for deducting this amount from the gross amount of rent and pay the SDC to the Tax Authorities. To do so, they must:


StepsRegistration
1Submit form I.R.614A and pay the SDC they witheld.
2Payment deadline: 30th of June for the first half of the year, and 31st of December for the second half of the year.
3Tax Payments are made through the Tax Portal .

Value Added Tax (VAT)

Value Added Tax (VAT) is a special tax imposed on all goods and services (with some exceptions). Every time you buy something, you also pay VAT even if you don't realise it.


Most of the time, VAT is included in the price and the person who sold you that good or service is responsible for paying that VAT to the government.

Tax rates

VAT Tax RatesRate %
Standard Rate19%
Reduced Rate9%
Reduced Rate5%
Reduced Rate3%
Zero Rate0%

Standard Rate

The standard rate of VAT applies to the sale of all goods and services in Cyprus, unless they fall under reduced rate or exempt categories.

Reduced Rate 9%

9% VATDescription
Passenger Transport ServicesTransportation of passengers and their luggage within the Cyprus using taxis and buses.
Restaurant and Catering ServicesProviding food and drinks for immediate consumption.
Accommodation ServicesStaying in hotels and similar places, including holiday rentals.
Sea Passenger TransportTransporting people and their luggage by sea within the country.
Elderly CareServices and goods provided by nursing homes (unless they are exempt).

Reduced Rate 5%

5% VATDescription
Funeral Goods and ServicesServices related to funerals and burials as well as the supply of coffins.
Artistic Services and RightsServices and royalties related to works by authors, composers, and other artists.
Bus TransportationBus transport services in cities and rural areas where the passenger pays a fare.
Campsite and Caravan RentalRenting spaces in campsites and caravan parks.
Admission FeesEntry fees to cultural and entertainment events such as shows, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, exhibitions and similar cultural events and facilities.
Sports Events and FacilitiesEntry fees for sports events and access to sports facilities.
Medical Equipment RepairRepair services for medical equipment.
Medical and Dental ServicesMedical and dental care which are not exempt from VAT, excluding medical examinations and procedures of cosmetic nature.
HairdressingServices provided by hairdressers.
Home Renovation and RepairRenovation and repair services for private homes.
School Canteen CateringCatering services by school canteens.
Fertilizers and Agricultural ChemicalsSubstances for enhancing soil and controlling pests.
Animal Feed and SeedsFeed for livestock, seeds for food crops and live animals for food.
WaterSupply of water for consumption and use.
Food and Non-Alcoholic DrinksMost food and drinks except alcohol and soft drinks.
Liquefied Petroleum GasGas used for heating and cooking.
Medicines and VaccinesPharmaceuticals and vaccines for medical and veterinary use.
ContraceptivesProducts for birth control.
Medical Equipment for DisabledEquipment for personal use by disabled individuals.
Child Car SeatsSeats designed for children up to 12 years old.
Handcrafted ArtOriginal, handmade art pieces.
Primary ResidencePurchase or construction of a new house for the use as the primary and permanent residence. 5% VAT on the first 130sqm up to a value of €350,000. The total house value should not exceed €475,000 and 190sqm in size.

Reduced Rate 3%

3% VATDescription
Books, Newspapers, and MagazinesPrinted or electronic materials including brochures, maps, and music scores (excluding those for advertising or mainly video/audio content).
Audiobooks for the DisabledAudiobooks designed for individuals with disabilities.
Special Equipment for the DisabledLift devices, wheelchairs and other vehicles for the disabled, orthopedic items, hearing aids and other devices aimed at compensating for or treating a disability.
Street Cleaning and Waste ManagementServices for street cleaning, waste collection, and waste treatment (excluding those by public authorities).
Sewage and Septic Tank ServicesWastewater treatment and septic tank cleaning services.
Theatre and Concert AdmissionEntry fees for performances of theatrical, musical, and dance works.

Reduced Rate 0%

0% VATDescription
Import-Related ServicesServices connected to bringing goods into the EU from outside, which are included in the total value of the import for tax purposes.
Exportation of GoodsServices on movable goods that are acquired or imported within the EU and then exported outside the EU.
Ship-Related ServicesDelivery, modification, repair, maintenance, chartering, and leasing of ships and ship equipment used for international or commercial purposes.
Aircraft-Related ServicesDelivery, modification, repair, maintenance, chartering, and leasing of aircraft and aircraft equipment used for international passenger transport.
Port and Airport ServicesServices for ships and aircraft at ports and airports.
Gold Deliveries to Central BankDeliveries of gold to the Central Bank.
Non-Profit Organization GoodsDeliveries to non-profits that export goods outside the EU for humanitarian, charitable, or educational activities.
Braille and Electronic TypewritersBraille typewriters and special electronic typewriters for disabled individuals, including new embossing typewriters
Wheelchairs and Mobility VehiclesWheelchairs and other mobility vehicles intended exclusively for the personal use of disabled persons.

Exemptions

ExemptionsDescription
Postal ServicesPostal services and related delivery of goods.
Hospital and Medical CareServices provided by public or private hospitals and closely related services and goods.
Medical Care by Health ProfessionalsServices provided by doctors, dentists, nurses, physiotherapists, and other registered health professionals.
Education and TrainingServices and goods related to education at all levels, provided by public and private educational institutions including private tutoring.
Non-Profit OrganizationsServices from non-profit organizations for political, religious, and other purposes to their members.
Insurance ServicesInsurance and reinsurance services, including related services from agents and brokers.
Financial ServicesServices such as loans, credit facilities, and management of financial instruments.
Lottery and BettingLottery tickets, betting coupons for horse races or football games, and other related betting services
Postage Stamps and Fiscal StampsDelivery of postage stamps and similar fiscal stamps at their nominal value.

VAT on Property

Renting Property

Renting property, like an apartment, is generally exempt from VAT.


However, there are circumstances when renting property is subject to VAT, including:


ExemptionsDescription
Hotel or Similar AccommodationIf the property is rented as part of the hotel or similar accommodation services, including camping sites.
Vehicle Parking SpacesRenting spaces specifically for vehicle parking is subject to VAT.
Permanently Installed Equipment and MachineryIf the property includes permanently installed equipment and machinery.
SafesRenting safes and other similar secure storage units.
Rent with an Option to PurchaseWhen the tenant has an option to purchase the property they are renting in their agreement.
Renting to BusinessesRenting property to a taxable person (business) for their business activities, unless the property is used as a residence.
Purchasing Property

Purchasing property, like a house or an apartment, is also generally exempt from VAT.


However, there are circumstances when purchasing property is subject to VAT, including:



ExemptionsDescription
New BuildingsNewly constructed house, apartment or other building that was not occupied by anyone else before.
Commercial PropertiesProperties used for business purposes, such as offices or retail spaces.
Undeveloped LandLand that is not yet developed but is intended for construction as part of a business project.


Essentially, if you are purchasing a previously owned property, such as a used house where people have already lived, you will not have to pay VAT on the transaction. However, the transaction will be subject to Land Registry Transfer fees, which you can read more about here.


If the property is newly built, then the standard rate of 19% VAT applies.


However, if you plan to use the property as your primary and permanent residence, you may be eligible for a reduced VAT rate of 5%.


This reduced rate applies on the first 130 square meters of the property provided that:


  1. The property's value does not exceed €350,000.
  2. The total value of the property does not exceed €475,000.
  3. The total size of the property is not larger than 190 square meters.

Registration, Returns and Payment


Every business, whether that be a company or an individual, has to register for VAT and obtain a VAT number if they meet one of the following conditions:


  • Their turnover subject to VAT exceeded €15,600 in the last 12 months

  • They expect to exceed €15,600 within the next 30 days

  • They have been providing services to taxable persons in other EU countries

  • They bought goods worth more than €10,251.61 from other EU countries in the year starting from the 1st of January or they expect to exceed that threshold in the next 30 days

  • They are not established in Cyprus but are engaging in taxable transactions with individuals in Cyprus or expect to do so in the next 30 days

Registration

If you meet any of the above conditions, you need to register to obtain your VAT number


StepsRegistration
1Fill out the relevant application form (T.D. 1101)
2Obtain proof that you are conducting taxable transactions, such as an invoice or a contract.
3Submit them in person to your district's Tax Department Office along with your Company's certificates (if applicable) and a copy of your ID.

VAT Returns

After you have obtained your VAT number, you will be required to submit your VAT returns online through the TFA Taxpayer Portal every quarter (three-month period) even if no transactions took place during that time.

VAT Payment

After submitting your VAT returns, you must pay any VAT owed by the 10th day of the second month following the end of that reporting period.


For example:

Let's say you submit your VAT returns on the 1st of August, which means that you are reporting on the VAT period between the 1st of May until the 31st of July.


The second month following July is September. That means that you'd have to pay any VAT due by the 10th of September.

VAT Refunds

In short, businesses can claim a VAT Refund when they pay more VAT on their business expenses (input) than VAT they receive from selling their goods and services (output).


In order to understand how VAT refunds work, you must first understand the concepts of input VAT and output VAT.


Input VAT

Input VAT is the amount of VAT that a business pays on the goods and services it purchases as part of its business operations.


For example:

Let's say you have an electronics store and you buy laptops worth €10,000 from your supplier.


You also buy office supplies worth €5,000. Along with VAT (19%), you pay €17850 in total and €2,850 from that is your input VAT.


Output VAT

Output VAT is the amount of VAT that a business charges on the goods and services it sells to its customers.


Following the previous example

Let's say you then sell all the laptops to your customers for €12,000. Along with VAT (19%), you receive €14280 in total. So, €2,280 is your output VAT.


In this instance, your input VAT is more than your output VAT. So, at the end of the tax period, you can deduct your input VAT (€2,850) from your output VAT (€2,280) and claim a refund of €570.


Claiming the Refund

If your input VAT is more than your output VAT, you can choose to carry that surplus forward so that you can offset future VAT liabilities. Alternatively, you can claim to have that amount refunded to you from the Tax Department.


Claims for VAT refunds are made through the TFA Taxpayer Portal.

Additionally, you must also complete form T.D.2008 and submit it to your local Tax Department office along with an IBAN certificate so the refund can be made into your bank account.


Keep in mind that you can only claim a refund within 6 years from the date the surplus was created. Also, the Tax Department can suspend your VAT refunds if you have not submitted income tax returns, until you have done so.

VIES (VAT Information Exchange System)

VIES is the VAT Information Exchange System is a search engine used to validate VAT numbers of businesses registered in Member States of the European Union and you can find it in the website of the European Commision.


When a business in one EU country sells goods or services to a business in another EU country, the transaction is referred to as an intra-community transaction.


Cypriot businesses that carry out intra-community transactions must register as such with the Tax Department.

Registration

There is no threshold for transactions in order to register to VIES. As soon as you start selling goods or services to other EU countries you must register.


StepsRegistration
1Fill out and scan the relevant application form (TFA 01)
2For a company, attach the Certificate of Directors along with the ID of the person signing the form. For self-employed or partnerships, only attach the ID of the person signing the form.
3Send all the documents via email to vatvima@vat.mof.gov.cy

VIES Returns (Recapitulative Statement)

Once registered, you must submit a Recapitulative Statement, which is a report of your sales in the EU, through the TFA Taxpayer Portal every month.


Particularly, you must submit the Recapitulative Statement by the 15th day of the month following the month you're reporting for.

For example:

If you're reporting for January, you must submit the Recapitulative Statement by February 15th.

INTRASTAT

Aside from VAT returns, every business that imports goods to Cyprus from other EU countries or exports goods from Cyprus to other EU countries may also need to submit Intrastat reports.


Particularly, the government sets the threshold for submitting Intrastat each year. For 2024, businesses that trade within the EU are required to submit Intrastat only if:


  1. Their imports from EU countries exceed €320,000
  2. Their exports to EU countries exceed €75,000

Registration

If you exceed the thresholds, you must register with the Tax Department to gain access to the Intrastat system.


StepsRegistration
1Fill out and scan the relevant application form (TAXISnet 01 - INTRASTAT)
2For a company, attach the Certificate of Directors along with the ID of the person signing the form. For self-employed or partnerships, only attach the ID of the person signing the form.
3Send all the documents via email to vatvima@vat.mof.gov.cy or submit it in person to your Districts Tax Department Office.

Intrastat Returns

Once you're registered, you must submit Intrastat returns every month electronically through TaxisNet. Intrastat returns must include information about your business' exports/imports.


Particularly, you must submit your Intrastat returns by the 10th day of the month following the month you're reporting for.

For example:

If you're reporting for January, you must submit your Intrastat returns by February 10th.

Capital Gains Tax

Capital gains tax in Cyprus at the rate of 20% is only applicable to profits from the sale of property in Cyprus. This also applies to the sale of shares of a company that owns property in Cyprus or indirectly owns property in Cyprus and 50% of its market value is from immovable property.


However, shares listed on any recognised stock exchange are excluded from capital gains tax.

Calculating Capital Gains Tax

Since capital gains tax is only applicable on profit, the first step is to find the taxable profit from the sale of a property.


Simply put, the taxable profit is the difference between the price the property is being sold today versus the price the property was originally purchased for, plus any additional costs such as renovation costs, legal fees etc, plus any of the lifetime allowances if requirements are met.


Sale Price - (Purchase Price + Additional Costs + Lifetime Allowance) = Taxable Profit


Taxable Profit x 20% = Capital Gains Tax

Purchase Price (Adjusted for Inflation)

To find the difference between the price a property is being sold for today versus the price it was originally purchased for, you can't simply deduct the purchase price from the current sale price.


If you bought a house for €100,000 in 1985, that amount of money doesn't have the same value today because of inflation.


Inflation makes money lose its purchasing power over time, so €100,000 in 1985 could buy more than €100,000 can today. To find out how much that house would cost in today's money, we must first adjust for inflation, showing the true value in today's terms.


You can find a table of Inflation Rates released and updated by the Tax Department here.


Keep in mind that if you bought your property before the 1st of January 1980, the original cost of that property is considered to be its value as of the 1st of January 1980. That value is based on the valuation of the Land Registry.


To find the the inflation-adjusted purchase price you must:


  1. Divide the Inflation Rate in the year of sale by the Inflation Rate in the year of purchase. This gives us the inflation adjustment number.

  2. Then, multiply the original purchase price by the inflation adjustment number. This gives you the adjusted purchase price.


For example:

Say you bought a house in January 1985 for €100,000 and you sold it in January 2024.


The Inflation Rate in 1985 was 97,68 while the Inflation Rate in January 2024 was 251,17. Dividing 251,17 by 97,68 gives us 2.571 (inflation adjustment number).


Finally, multiplying €100,000 (original price) by 2.571, gives us €257,100, and that is the purchase price of your house adjusted for inflation.

Additional Expenses

Once you have found the purchase price adjusted for inflation, you should then add to the deductible amount any additional expenses that you incurred in relation to the property that were made exclusively for making a profit, provided that these expenses were not deducted from your then income tax returns.


This can include renovations that increase the value of a house and any expenses related to the sale of a house such as transfer fees, real estate commissions, legal fees, interest on loans and others.


Again, you can adjust these expenses to account for inflation to find the inflation-adjusted expenses:


  1. Divide the Inflation Rate in the year of sale by the Inflation Rate in the year the expenses were made. This gives us the inflation adjustment number.

  2. Then, multiply the original cost of expenses by the inflation adjustment number. This gives you the adjusted expenses.


For example:

Say you made some renovations to your house in January 1996 that cost €20,000, and you sold your house in January 2024.


The Inflation Rate in 1996 was 148,32 while the Inflation Rate in January 2024 was 251,17. Dividing 251,17 by 148,32 gives us 1.693 (inflation adjustment number).


Finally, multiplying €20,000 (original cost of expenses) by 1.693, gives us €33,868, and that is the cost of the renovation of your house adjusted for inflation.

Lifetime Allowances

Finally, individuals are entitled to lifetime allowances which can also be added to the deductible amount before calculating the amount subject to Capital Gains Tax.


Particularly, there are three types of allowances which an individual can claim:

Allowances
Sale of a Primary Residence€85,430
Sale of Agricultural Land by a Farmer€25,629
Any Other Sale€17.086

Although it is possible to combine the above allowances, an individual cannot exceed the combined amount of €85,430. Additionally, you can only claim it once in your life.


Example

Using all variables, we can accurately calculate the capital gains tax payable upon the sale of a property.

Following the previous examples:


Sale Price - (Purchase Price + Additional Costs + Lifetime Allowance) = Taxable Profit


Taxable Profit x 20% = Capital Gains Tax


Say you sell your house in January 2024 for €400,000.


Using the scenario above, you bought your house in January 1985 for €100,000.


Purchase Price Adjusted for Inflation = €257,100


Moreover, you had renovations in your house in January 1996 that cost €20,000.


Additional Expenses Adjusted for Inflation = €33,868


Finally, this is the first time you are selling a property and your house is your primary residence. So you can claim the relevant lifetime allowance.


Lifetime Allowance = €85,430


Therefore:


€400,000 - (€257,100 + €33,868 + €85,430) = €23,610


€23,610 x 20% = €4,722


So, in the above scenario you'd have to pay €4,722 in capital gains tax for the sale of your house.

Exemptions

There are also a number of instances where the disposal of a property is not subject to Capital Gains Tax.


ExemptionsDescription
Transfer by deathWhen property is transferred due to the death of the owner. Such as in cases of inheritance.
Gifts between Close RelativesGifts made between parents and children, spouses, or close relatives (up to the third degree).
Foster ParentsGifts made between s foster parent to a foster child.
Property exchangesProvided that the value of the two properties being exchanged is the same.
Gifts to a company owned by family membersGifts to a company, where all shareholders are family members, are exempt if five years after the gift is made, the shareholders are still members of the family of the person who made the gift.
Gifts from a company owned by family members to a shareholderGifts from a family-owned company to a shareholder are exempt if the property was originally gifted to the company.
Gifts to the Republic or for charitable purposesGifts to the government or gifts towards educational, cultural, or charitable purposes to any approved charitable organisation.
Agricultural land under conditionsExchange or disposal of immovable property under the Agricultural Land (Consolidation) Laws.
Transfer of property or company shares due to reorganisationProperty transfers during company reorganisations and transfers of shares during company reorganisations, where shares are exchanged for other shares.
Property transfer between divorced spousesProperty transfers between divorced spouses as part of a property settlement.
Shares listed on a recognised stock exchangeThe transfer or disposal of shares listed on any recognised stock exchange.

Taxes and Fees on Property Transactions

When selling or buying a Property in Cyprus, several taxes and fees are applicable based on the transaction's price and the property's status.


These are paid between the seller and the buyer as follows:

SellerTax %
Capital Gains Tax20%
Property Disposal Levy0.4%

BuyerTax %
VAT (only If its a newly built property)19%
Transfer Fees (only if its a resale)3% - 8%
Stamp Duty0.15% - 0.2%

You can read more on Capital Gains Tax here, and more on VAT here. This article will cover the remaining property related taxes and fees.

Land Registry Transfer Fees

When transferring a property in Cyprus, the Land Registry imposes a transfer fee which is paid by the person receiving the transfer.


The transfer fee rates are progressive which means that different portions of the value of the property will be taxed at different rates.


Therefore, the higher the value of the property, the higher the transfer fee. The value of the property is estimated by the Land Registry.


FromToFee Rate
€0€85,0003%
€85,001€170,0005%
€170,000 +8%

In cases where the property transaction in question is not subject to VAT, the law provides for a 50% reduction of the transfer fee.


For example:

Say you purchased a house for €300,000. The house was a resale so no VAT was applicable.


The Land Registry will calculate the transfer fee as follows:


First €85,000:

  • Rate: 3%
  • Fee: €85,000 x 0.03 = €2,550

Next €85,000 (€85,001 to €170,000):

  • Rate: 5%
  • Fee: €85,000 x 0.05 = €4,250

Remaining €130,000 (€170,001 to €300,000):

  • Rate: 8%

  • Fee: €130,000 x 0.08 = €10,400


Cumulative Fee:

  • €2,550+€4,250+€10,400=€17,200

Total Fee:

  • Total Fee after 50% Reduction: €17,200 x 0.5 = €8,600

Transfers Between Family

Different rates are applicable in cases where the transfer occurs between family members. Particularly:

Transfers Between FamilyTax %
From parents to children0%
Between spouses0.1%
Between third-degree relatives0.1%

Exemptions

There are also a number of situations where the transaction is exempt from transfer fees.


ExemptionsDescription
VAT-Imposed TransactionProperty transfers that are subject to VAT are generally exempt from transfer fees. However, if the Land Registry thinks that the price you declared is not the true market value of the property they might charge a transfer fee based on the market value, minus the fee that would have been charged on your declared price.
Bankruptcy & Company LiquidationProperty transfers in the context of bankruptcy proceedings or company liquidations provided that the sale price does not exceed €350,000.
RestructuringProperty transfers as part of a company's or individual's financial restructuring (such as debt restructuring).
Property ExchangesProvided that the properties exchanged are of equal value. If they are not, the person acquiring the higher-valued property pays transfer fees based on the difference in value.

Levy on Property Disposals

In 2021, the Government introduced a 0,4% levy on the proceeds arising from all immovable property disposals.


The aim of this levy is to fund compensation efforts for individuals affected by the Turkish invasion and occupation with the aim of restoring their pre-war financial condition.


Particularly, the levy is applied as follows:


  • In the case of transferring real estate through a sale, where the property's value has been determined by the Land Registry, the seller must pay a fee equal to 0.4% of the sale price of the property.

  • When shares of a company not listed on any recognized stock exchange are sold, and the company directly or indirectly owns real estate for which Land Registry has determined a value, the seller must pay a fee equal to 0.40% of the last assessed value of the real estate, proportional to the shares being transferred.

For example:

Say you own 25% of the Shares of a Company that owns real estate with an estimated value of €1,000,000.


When you sell those shares, you will have to pay this levy in addition to other applicable taxes:


Calculate the Total Levy Based on Real Estate Value:


Total levy = 0.4% x €1,000,000 = €4,000.


Calculate Your Share of the Levy:


Since you own 25% of the company, you are responsible for 25% of the total levy.


Your share of the levy = 25% x €4,000 = €1,000.

Stamp Duty

Legal documents that are related to transactions involving property are subject to stamp duty. In essence stamp duty provides legal validity to a document ensuring that its enforceable and recognised by authorities.

Contracts/Agreements

Stamp Duty is calculated on the value of the Contract/Agreement as follows:


FromToStamp Duty
€0€5,0000%
€5,001€170,0000.15%
€170,000 +0.2%

The maximum amount of stamp duty that may be imposed on a document is capped at €20,000.


Other Documents

Stamp Duty is also applicable on other types of documents as well:

Other DocumentsStamp Duty €
General power of attorney€6
Special power of attorney€2
Letters of guarantee€4
Letter of credit€2
Will€18
Contracts without a specified price€35
Certified copies of contracts and documents€2
Issuance of tax residency certificate€80

Immovable Property Tax

As of 2017, immovable property tax has been abolished.

Inheritance Tax

As of 2000, inheritance tax has been abolished.


However, the executor/administrator of a deceased person's estate is required to submit a statement of the deceased's assets and liabilities to the tax authorities within six months of the date of death.





Our blogs are regularly updated to ensure information is current and accurate.