An individual who is a tax resident in the Republic of Cyprus (the Republic), is taxed on income accruing or arising from sources both within and outside the Republic.
Individuals qualify as residents of Cyprus if the following conditions are met:
The individual does not spend more than 183 days in any other country;
The individual is not a tax resident of any other country;
The individual spends at least 60 days in Cyprus;
The individual carries on a business in Cyprus, is employed in Cyprus or holds an office in a Cyprus tax resident person at any time during the tax year.
An individual is exempt from income tax if their taxable income is up to €19,500. Taxable income exceeding this amount is subject to progressive income tax rates ranging from 20% to 35% (for income exceeding €60,000).
Employees and employers are subject to social insurance contributions at the rate of 8.3% and 10% respectively, on the employees’ gross employment income, subject to an annual income ceiling of just less than €55.000.
National Health System (ΓεΣΥ)
As of 1 March 2019 obligatory contributions relating to the implementation of the new National Health System (ΓεΣΥ) have been imposed. The application for the contributions will be implemented in two phases.
Phase A applies from 1/3/2019 to 28/2/2020 and is set at the rate of 1.85% for employers and 1.7% for employees.
Phase B applies from 1/3/2020 onwards and will be set at the rate of 2.9% for employers and 2.65% for employees.
Capital Gains Tax
Capital gains tax is imposed at a rate of 20% on individuals that have gains from the sale of Cypriot real estate. Capital gains is also imposed if there are gains from the disposal of shares of companies not listed on a recognised stock exchange which own immovable property situated in the Republic. Additionally it is imposed when there are gains from the disposal of shares of companies which indirectly own immovable property situated in the Republic and derive at least 50% of their market value from such immovable property.
This does not apply for any gains arising from the disposal of non-Cypriot real estate.
A non-domiciled individual, irrespective of his/her tax residency status is exempt from tax on dividend and interest income.