Our blogs are regularly updated to ensure information is current and accurate.
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:
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.
Since 2017, individuals can become tax residents of Cyprus using the 60-day rule. To do so, they must meet all the following conditions:
1 | Stay in Cyprus for at least 60 days in a year. |
2 | Work in Cyprus, run a business here or be an executive in a Cypriot company. |
3 | Have a permanent home in Cyprus (either rented or owned). |
4 | Not spend more than 183 days in any other single country. |
5 | Not 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.
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.
For the purpose of calculating the days of residence in the Cyprus:
1 | The day of departure from Cyprus is considered a day outside Cyprus. |
2 | The day of arrival in Cyprus is considered a day within Cyprus. |
3 | Arrival in Cyprus and departure from Cyprus on the same day is considered one day within Cyprus. |
4 | Departure 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.
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:
1 | You have and maintain a domicile of choice (permanent residence) in another country. |
2 | You were not a tax resident of Cyprus for the last 20 years. |
3 | You have obtained Tax Residency and a Tax Identification Code in Cyprus. |
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.
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 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.
Contributions | Per Employee % |
---|---|
Social Insurance | 8.8% |
General Healthcare System (GHS) | 2.90% |
Redundancy Fund | 1.2% |
Human Resources Development Fund | 0.5% |
Social Cohesion Fund | 2% |
First, you need to register with the Employers' Register of the Social Insurance Services:
Steps | |
---|---|
1 | Fill out the relevant application form (YKA 1-001). |
2 | Submit it to any Social Insurance District Office or Citizen Service Centre to obtain your Employer Registration Number. |
3 | Create an account on the SISnet platform to pay the contributions for your employees online. |
These payments must be made by the end of the following month for which they are due.
Contributions for July 2024 must be paid by the end of August 2024.
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 in Cyprus, where the majority of the workforce is employed by others, it's important to understand how social insurance and GHS contributions work.
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 Insurance | Salary |
---|---|
Employer | 8.8% |
Employee | 8.8% |
State | 5.2% |
Similarly, GHS contributions are divided between yourself, your employer and the state.
General Healthcare System | Salary |
---|---|
Employer | 2.90% |
Employee | 2.65% |
State | 4.70% |
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.
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.
If you're self-employed in Cyprus, you are responsible for registering and paying your Social Insurance and GHS contributions yourself.
The overall contribution to social insurance is 21.8% of your earnings, and it is divided between yourself and the state as follows:
Social Insurance | Salary |
---|---|
Self-Employed | 16.6% |
State | 5.2% |
Similarly, GHS contributions are divided between yourself and the state.
General Healthcare System | Salary |
---|---|
Self-Employed | 4% |
State | 4.70% |
First, you need to register as self-employed with the Social Insurance Services:
Steps | |
---|---|
1 | Fill out the relevant application form (YKA 1-008). |
2 | Submit it to any Social Insurance District Office or Citizen Service Centre to obtain your Social Insurance Number. |
3 | Create an account on the SISnet platform to pay your contributions online. |
For purposes of calculating the amount of your contributions, the state bases the calculation on your occupation.
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 Categories | Minimum 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.
Remember that you'll have to make these payments yourself every three months.
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.
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 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.
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.
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 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.
If the company paid dividends to its shareholders in July, they must make the relevant GHS payment by the end of August.
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.
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 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.
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.
From | To | Tax Rate |
---|---|---|
€0 | €19,500 | 0% |
€19,501 | €28,000 | 20% |
€28,001 | €36,300 | 25% |
€36,301 | €60,000 | 30% |
€60,000 + | 35% |
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.
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.
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.
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.
There are several types of income in Cyprus that are not counted when calculating income tax.
Exemptions | Description |
---|---|
Interest | Any 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. |
Dividends | Profits 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 securities | 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. |
Pensions and Special Relief Grants | Pensions received by retired individuals as well as special relief grants under law (N. 114/1988). |
Foreign Exchange Gains | Gains 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 Grants | Income from scholarships or educational grants for students. |
One-Time Payments | Lump 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 Employment | If 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. |
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.
Deductions | Description |
---|---|
Rents | If 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 Property | If 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 Assets | Interest on loans for acquiring assets used in the business is also deductible. |
Contributions towards Social Insurance and other funds | You 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 Enterprises | You 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. |
Donations | If you have made donations to approved charities, you may deduct those amounts from your taxable income, provided that you have receipts. |
Trade Unions | You can also deduct any amounts you have given towards trade unions or other professional associations. |
Business Entertainment Expenses | Business 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 Expenses | Expenses 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.
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.
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
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.
As an individual, to submit your tax returns and pay your income tax, you have to get a Tax Identification Number. To do that:
Steps | Registration |
---|---|
1 | Register to the (Tax For All (TFA) Taxpayer Portal) on the Tax Department's website. |
2 | Receive your TIN and User Access Codes for TaxisNet via email. |
3 | On first login on TaxisNet, change your password and optionally your username. |
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.
Your tax returns for 2024 must be submitted by the 31st of July 2025.
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.
Once you have submitted your tax returns, you will then have to pay the applicable taxes, if any.
Steps | Payment |
---|---|
1 | Tax Payments are made through the Tax Portal . |
2 | Use your TaxisNet username and password to log in. |
3 | The tax statement is automatically generated based on your tax returns. |
4 | Pay the amount due. |
5 | Payment deadline: 31st July. |
You can find a detailed guide on how to pay your income tax here .
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.
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.
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.
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.
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.
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.
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:
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.
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.
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.
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.
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:
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.
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.
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.
From | To | Tax Rate |
---|---|---|
€19,501 | €28,000 | 20% |
€28,001 | €36,300 | 25% |
€36,301 | €60,000 | 30% |
€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.
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 .
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.
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.
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 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.
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.
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.
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:
Exemptions | Description |
---|---|
Interest | If 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. |
Dividends | When 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 securities | Profits 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. |
Charities | Income of religious, charitable, or public educational institutions. |
Foreign Exchange Gains | Gains 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 organisations | Non-profit companies promoting art, science, or sports. |
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:
Deductions | Description |
---|---|
Repair and Maintenance Expenses | Deductions 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 Contributions | Salaries 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 Debts | Bad 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 Expenses | Expenses 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 Assets | Expenditures 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 Causes | Donations 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 Assets | Interest on loans for acquiring assets used in the business is deductible. |
Education Fund Contributions | Contributions to an approved fund for the education and maintenance of individuals attending educational institutions are deductible. |
Profits from Intangible Assets | 80% 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 Expenses | Business 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 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.
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.
Buildings | Rate % |
---|---|
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 Greenhouses | 33.3% |
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.
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 Machinery | Rate % |
---|---|
Fork lifts, excavators, loading vehicles, bulldozers and oil barrels | 25% |
Motor vehicles of all types except saloon cars | 20% |
Personal computers (hardware) and operating software | 20% |
Application software - up to €1.709 | 100% |
Application software - over €1.709 | 33 1/3% |
Plant and machinery used in agriculture | 15% |
Plant and machinery; Furniture and fittings | 10% |
Plant and machinery, Furniture and fittings (If acquired between 2012 - 2018) | 20% |
Tools | 33.3% |
Others | Rate % |
---|---|
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 vessels | 8% |
Sailing vessels | 4.5% |
Motor Yachts; Steamers, tugs and fishing boats; New passenger vessels | 6% |
Shipmotor launches | 12.5% |
Wind power generators and photovoltaic systems | 10% |
There are however, certain expenses that cannot be deducted from your business's income.
Non-Deductible Expenses | Description |
---|---|
Personal and Commuting Expenses | You cannot deduct expenses related to your personal life or commuting from home to work. |
Rent for Self-Owned Buildings Used for Business | You cannot deduct rent for buildings you own and use for your business. |
Personal Payments of Interest or Fees on Capital | You cannot deduct payments of interest or fees on capital paid to yourself. |
Cost of Goods Used Personally | You cannot deduct the cost of goods taken from your business for personal use. |
Non-Business Expenses | You cannot deduct expenses that are not solely for earning business income. |
Withdrawn or Used Capital | You cannot deduct any amount of capital that is withdrawn or used as capital. |
Improvement and Alteration Expenses | You cannot deduct expenses for improvements, modifications, or additions to your property. |
Recoverable Amounts Through Insurance or Indemnity | You cannot deduct amounts that can be recovered through insurance or indemnity contracts. |
Non-Income Related Rent or Repair Costs | You cannot deduct rent or repair costs not related to earning income. |
Tax Payments | You cannot deduct amounts paid or payable as taxes under the applicable tax laws. |
Voluntary Expenses | You cannot deduct voluntary expenses unless specifically allowed by law. |
Business Entertainment and Hospitality | You cannot deduct business entertainment expenses if they are more than 1% of the company's gross revenue and up to €17.086. |
Private Vehicle Expenses | You cannot deduct expenses related to a private motor vehicle. |
Professional Tax Payments | You cannot deduct amounts paid or payable related to professional tax. |
Interest on Private Vehicle or Non-Business Assets | You 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 Companies | Companies cannot deduct borrowing costs exceeding 30% of taxable income before interest, taxes, deductions, and additions, with some exceptions for group companies and specific conditions. |
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.
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.
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.
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.
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:
Steps | Registration |
---|---|
1 | Register to the (Tax For All (TFA) Taxpayer Portal) on the Tax Department's website. |
2 | Receive your TIN and User Access Codes for TaxisNet via email. |
3 | On first login on TaxisNet, change your password and optionally your username. |
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.
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.
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.
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.
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.
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.
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.
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.
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:
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
If the company paid dividends to its shareholders in July, they must make the relevant SDC payment by the end of August.
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, 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 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%.
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 interest payments made in July, the applicable SDC must be paid by the end of August.
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.
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.
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.
If your tenant is an individual, you must do the following as the landlord:
Steps | Registration |
---|---|
1 | File a self-assessment on TaxisNet |
2 | Payment deadline: 30th of June for the first half of the year, and 31st of December for the second half of the year. |
3 | Tax Payments are made through the Tax Portal . |
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:
Steps | Registration |
---|---|
1 | Submit form I.R.614A and pay the SDC they witheld. |
2 | Payment deadline: 30th of June for the first half of the year, and 31st of December for the second half of the year. |
3 | Tax Payments are made through the Tax Portal . |
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.
VAT Tax Rates | Rate % |
---|---|
Standard Rate | 19% |
Reduced Rate | 9% |
Reduced Rate | 5% |
Reduced Rate | 3% |
Zero Rate | 0% |
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.
9% VAT | Description |
---|---|
Passenger Transport Services | Transportation of passengers and their luggage within the Cyprus using taxis and buses. |
Restaurant and Catering Services | Providing food and drinks for immediate consumption. |
Accommodation Services | Staying in hotels and similar places, including holiday rentals. |
Sea Passenger Transport | Transporting people and their luggage by sea within the country. |
Elderly Care | Services and goods provided by nursing homes (unless they are exempt). |
5% VAT | Description |
---|---|
Funeral Goods and Services | Services related to funerals and burials as well as the supply of coffins. |
Artistic Services and Rights | Services and royalties related to works by authors, composers, and other artists. |
Bus Transportation | Bus transport services in cities and rural areas where the passenger pays a fare. |
Campsite and Caravan Rental | Renting spaces in campsites and caravan parks. |
Admission Fees | Entry 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 Facilities | Entry fees for sports events and access to sports facilities. |
Medical Equipment Repair | Repair services for medical equipment. |
Medical and Dental Services | Medical and dental care which are not exempt from VAT, excluding medical examinations and procedures of cosmetic nature. |
Hairdressing | Services provided by hairdressers. |
Home Renovation and Repair | Renovation and repair services for private homes. |
School Canteen Catering | Catering services by school canteens. |
Fertilizers and Agricultural Chemicals | Substances for enhancing soil and controlling pests. |
Animal Feed and Seeds | Feed for livestock, seeds for food crops and live animals for food. |
Water | Supply of water for consumption and use. |
Food and Non-Alcoholic Drinks | Most food and drinks except alcohol and soft drinks. |
Liquefied Petroleum Gas | Gas used for heating and cooking. |
Medicines and Vaccines | Pharmaceuticals and vaccines for medical and veterinary use. |
Contraceptives | Products for birth control. |
Medical Equipment for Disabled | Equipment for personal use by disabled individuals. |
Child Car Seats | Seats designed for children up to 12 years old. |
Handcrafted Art | Original, handmade art pieces. |
Primary Residence | Purchase 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. |
3% VAT | Description |
---|---|
Books, Newspapers, and Magazines | Printed or electronic materials including brochures, maps, and music scores (excluding those for advertising or mainly video/audio content). |
Audiobooks for the Disabled | Audiobooks designed for individuals with disabilities. |
Special Equipment for the Disabled | Lift 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 Management | Services for street cleaning, waste collection, and waste treatment (excluding those by public authorities). |
Sewage and Septic Tank Services | Wastewater treatment and septic tank cleaning services. |
Theatre and Concert Admission | Entry fees for performances of theatrical, musical, and dance works. |
0% VAT | Description |
---|---|
Import-Related Services | Services connected to bringing goods into the EU from outside, which are included in the total value of the import for tax purposes. |
Exportation of Goods | Services on movable goods that are acquired or imported within the EU and then exported outside the EU. |
Ship-Related Services | Delivery, modification, repair, maintenance, chartering, and leasing of ships and ship equipment used for international or commercial purposes. |
Aircraft-Related Services | Delivery, modification, repair, maintenance, chartering, and leasing of aircraft and aircraft equipment used for international passenger transport. |
Port and Airport Services | Services for ships and aircraft at ports and airports. |
Gold Deliveries to Central Bank | Deliveries of gold to the Central Bank. |
Non-Profit Organization Goods | Deliveries to non-profits that export goods outside the EU for humanitarian, charitable, or educational activities. |
Braille and Electronic Typewriters | Braille typewriters and special electronic typewriters for disabled individuals, including new embossing typewriters |
Wheelchairs and Mobility Vehicles | Wheelchairs and other mobility vehicles intended exclusively for the personal use of disabled persons. |
Exemptions | Description |
---|---|
Postal Services | Postal services and related delivery of goods. |
Hospital and Medical Care | Services provided by public or private hospitals and closely related services and goods. |
Medical Care by Health Professionals | Services provided by doctors, dentists, nurses, physiotherapists, and other registered health professionals. |
Education and Training | Services and goods related to education at all levels, provided by public and private educational institutions including private tutoring. |
Non-Profit Organizations | Services from non-profit organizations for political, religious, and other purposes to their members. |
Insurance Services | Insurance and reinsurance services, including related services from agents and brokers. |
Financial Services | Services such as loans, credit facilities, and management of financial instruments. |
Lottery and Betting | Lottery tickets, betting coupons for horse races or football games, and other related betting services |
Postage Stamps and Fiscal Stamps | Delivery of postage stamps and similar fiscal stamps at their nominal value. |
Renting property, like an apartment, is generally exempt from VAT.
However, there are circumstances when renting property is subject to VAT, including:
Exemptions | Description |
---|---|
Hotel or Similar Accommodation | If the property is rented as part of the hotel or similar accommodation services, including camping sites. |
Vehicle Parking Spaces | Renting spaces specifically for vehicle parking is subject to VAT. |
Permanently Installed Equipment and Machinery | If the property includes permanently installed equipment and machinery. |
Safes | Renting safes and other similar secure storage units. |
Rent with an Option to Purchase | When the tenant has an option to purchase the property they are renting in their agreement. |
Renting to Businesses | Renting property to a taxable person (business) for their business activities, unless the property is used as a residence. |
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:
Exemptions | Description |
---|---|
New Buildings | Newly constructed house, apartment or other building that was not occupied by anyone else before. |
Commercial Properties | Properties used for business purposes, such as offices or retail spaces. |
Undeveloped Land | Land 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:
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:
If you meet any of the above conditions, you need to register to obtain your VAT number
Steps | Registration |
---|---|
1 | Fill out the relevant application form (T.D. 1101) |
2 | Obtain proof that you are conducting taxable transactions, such as an invoice or a contract. |
3 | Submit them in person to your district's Tax Department Office along with your Company's certificates (if applicable) and a copy of your ID. |
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.
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.
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.
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 is the amount of VAT that a business pays on the goods and services it purchases as part of its business operations.
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 is the amount of VAT that a business charges on the goods and services it sells to its customers.
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.
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 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.
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.
Steps | Registration |
---|---|
1 | Fill out and scan the relevant application form (TFA 01) |
2 | For 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. |
3 | Send all the documents via email to vatvima@vat.mof.gov.cy |
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.
If you're reporting for January, you must submit the Recapitulative Statement by February 15th.
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:
If you exceed the thresholds, you must register with the Tax Department to gain access to the Intrastat system.
Steps | Registration |
---|---|
1 | Fill out and scan the relevant application form (TAXISnet 01 - INTRASTAT) |
2 | For 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. |
3 | Send all the documents via email to vatvima@vat.mof.gov.cy or submit it in person to your Districts Tax Department Office. |
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.
If you're reporting for January, you must submit your Intrastat returns by February 10th.
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.
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
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:
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.
Then, multiply the original purchase price by the inflation adjustment number. This gives you the adjusted purchase price.
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.
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:
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.
Then, multiply the original cost of expenses by the inflation adjustment number. This gives you the adjusted expenses.
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.
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 | € |
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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.
Using all variables, we can accurately calculate the capital gains tax payable upon the sale of a property.
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.
There are also a number of instances where the disposal of a property is not subject to Capital Gains Tax.
Exemptions | Description |
---|---|
Transfer by death | When property is transferred due to the death of the owner. Such as in cases of inheritance. |
Gifts between Close Relatives | Gifts made between parents and children, spouses, or close relatives (up to the third degree). |
Foster Parents | Gifts made between s foster parent to a foster child. |
Property exchanges | Provided that the value of the two properties being exchanged is the same. |
Gifts to a company owned by family members | Gifts 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 shareholder | Gifts 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 purposes | Gifts to the government or gifts towards educational, cultural, or charitable purposes to any approved charitable organisation. |
Agricultural land under conditions | Exchange or disposal of immovable property under the Agricultural Land (Consolidation) Laws. |
Transfer of property or company shares due to reorganisation | Property transfers during company reorganisations and transfers of shares during company reorganisations, where shares are exchanged for other shares. |
Property transfer between divorced spouses | Property transfers between divorced spouses as part of a property settlement. |
Shares listed on a recognised stock exchange | The transfer or disposal of shares listed on any recognised stock exchange. |
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:
Seller | Tax % |
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Capital Gains Tax | 20% |
Property Disposal Levy | 0.4% |
Buyer | Tax % |
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VAT (only If its a newly built property) | 19% |
Transfer Fees (only if its a resale) | 3% - 8% |
Stamp Duty | 0.15% - 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.
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.
From | To | Fee Rate |
---|---|---|
€0 | €85,000 | 3% |
€85,001 | €170,000 | 5% |
€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.
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:
Next €85,000 (€85,001 to €170,000):
Remaining €130,000 (€170,001 to €300,000):
Rate: 8%
Fee: €130,000 x 0.08 = €10,400
Cumulative Fee:
Total Fee:
Different rates are applicable in cases where the transfer occurs between family members. Particularly:
Transfers Between Family | Tax % |
---|---|
From parents to children | 0% |
Between spouses | 0.1% |
Between third-degree relatives | 0.1% |
There are also a number of situations where the transaction is exempt from transfer fees.
Exemptions | Description |
---|---|
VAT-Imposed Transaction | Property 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 Liquidation | Property transfers in the context of bankruptcy proceedings or company liquidations provided that the sale price does not exceed €350,000. |
Restructuring | Property transfers as part of a company's or individual's financial restructuring (such as debt restructuring). |
Property Exchanges | Provided 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. |
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.
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.
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.
Stamp Duty is calculated on the value of the Contract/Agreement as follows:
From | To | Stamp Duty |
---|---|---|
€0 | €5,000 | 0% |
€5,001 | €170,000 | 0.15% |
€170,000 + | 0.2% |
The maximum amount of stamp duty that may be imposed on a document is capped at €20,000.
Stamp Duty is also applicable on other types of documents as well:
Other Documents | Stamp Duty € |
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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 |
As of 2017, immovable property tax has been abolished.
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.