Taxes for individuals in Cyprus in 2024
The tax system in Cyprus is considered one of the most popular and profitable in the European Union, providing the opportunity to legally reduce both personal and corporate tax obligations.
Cyprus offers unique tax advantages for its residents, including low corporate tax rates, making it attractive to entrepreneurs. However, the benefits for individuals are also equally important.
- Income tax and social charges
Cyprus offers some of the lowest income tax and social charges rates in the EU, bringing significant tax benefits to individuals.
- Double taxation agreements
Over 65 signed agreements with various countries create favorable conditions for individuals engaged in international activities, eliminating the risk of double taxation.
- No taxes on wealth and inheritance
Individuals in Cyprus are exempt from wealth and inheritance taxes, making the island attractive to those seeking to preserve and pass on their assets.
- No annual property tax
Tax residents of Cyprus are not required to pay annual property tax, which is an additional source of tax benefits.
- Benefits for income from intellectual property
Special conditions for taxation of income from intellectual property allow you to effectively manage intellectual assets – IP-Box regime.
- There are special programs for new residents
This is the tax status Non-Domicile, and also income tax benefits for foreigners working in Cyprus with an annual salary of more than 55 thousand euros.
Tax residents and non-residents in Cyprus: important information
Tax residence status determines in which country a person is required to pay taxes on his worldwide income.
- All individuals who are tax residents of Cyprus are required to pay taxes on their income anywhere in the world.
- And individuals who are not tax residents of Cyprus are taxed only on certain types of income received or earned in the territory of this country.
To take full advantage of the tax system and optimize their taxes, individuals can choose one of two options to become a Cyprus tax resident.
- An individual becomes a tax resident of Cyprus in accordance with the “183 Day Rule” if he spends more than 183 days in Cyprus during one calendar year, without the need to comply with additional conditions or criteria.
- The second option, the “60 day rule”, provides the opportunity for individuals to become tax residents of Cyprus after spending only 60 days on the island and subject to certain conditions, such as: doing business and/or working in Cyprus and/or being a director of a company, registered in Cyprus at any time during the tax year + have a permanent residence in Cyprus (owned or leased).
Taxes for individuals in Cyprus in 2024
Individuals who are tax residents of Cyprus are subject to various taxes. Among them the main ones stand out:
1. Personal income tax (Income tax):
- Applied on a progressive scale from 0% to 35%.
- The first 19,500 euros are tax free.
- Income tax rates:
– up to 19,500 € – 0%
– 19,501 to 28,000 € – 20%
– 28,001 to 36,300 € – 25%
– 36,301 to 60,000 € – 30%
– 60,001 € and more – 35%
- Benefits: Foreigners working in Cyprus with a salary exceeding €55,000 per year are granted a 50% reduction in income tax for 17 years.
2. Contributions to state social and health insurance funds:
- For employees and employers: from January 1, 2024, the contribution to the state social insurance fund is 8.8%. Thereafter, the rate will increase every five years until it reaches 10.7% from January 1, 2039.
- For self-employed persons: 16.6% of income and also increases every 5 years.
- Contributions to the State Health Insurance Fund (GeSY) vary depending on the category (company employees, self-employed persons, officials). For example, for company employees the rate is 2.65%, and for the self-employed – 4%.
3. Capital gains tax:
- Applies to profits from the sale of real estate or shares of companies owning real estate in Cyprus.
- Rate: 20% of the difference between the sale and purchase prices.
- Exemption from tax in some cases, for example, when giving as a gift to relatives or charitable organizations.
4. VAT (Value Added Tax):
- The standard rate is 19%, there are also reduced rates of 9% and 5%.
Understanding these tax mechanisms is key to effectively managing individuals’ financial obligations.
For more detailed information on the procedures for calculating and paying taxes in your particular case, please contact our Cyprus tax experts for advice!
You can obtain advice about taxes in Cyprus in our office in Larnaca or online
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FAQ
Individuals in Cyprus are required to pay income tax, insurance, social contributions and capital gains tax depending on their income and assets.
Individuals can enjoy a number of benefits such as no wealth tax, no gift tax, no dividend tax, no interest tax, and no annual estate tax. There are also special programs for new residents, such as Non-Domicile status, as well as income tax benefits for foreigners working in Cyprus with an annual salary of more than 55 thousand euros.
Individuals who are tax residents of Cyprus must submit annual income declarations. However, those with an annual income below the specified level are exempt from filing income tax returns (for example, in 2023, those with incomes of less than €19,500 will not be required to file such returns).
Payment of taxes is carried out in accordance with the prescribed deadlines, while the tax office provides convenient methods and online services to comply with this procedure. More detailed information about the tax calendar can be obtained from the official website of the Cyprus Tax Department.
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