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INDIVIDUALS TAX

Resident in Cyprus

An individual is tax resident in Cyprus if he/she is physically present in Cyprus for an aggregate period exceeding 183 days in the tax year.  Tax resident individuals are liable to tax in Cyprus on their worldwide income whereas non-residents are liable to tax on income accruing or arising in Cyprus

Tax rates

The tax rates that apply to individuals for the tax year 2014 are as follows:

Taxable Income

Tax rate 

%

Amount of tax

Cumulative tax

0- 19.500

19.501-28.000

28.001-36.300

36.301-60.000

60.000 and over

Nil

20

25

30

35

Nil

1.700

2.075

7.110

 

Nil

1.700

3.775

10.885

 





Exempt income

The main exemptions are as follows:

 

  • Dividends received are exempt from income tax (see also for Special Contributions for Defence Law provisions).
  • Profits of a permanent establishment situated outside Cyprus of a Cypriot resident are exempt from tax.  This exemption does not apply if the permanent establishment engages more than 50% in activities, which lead to investment income, and the foreign tax burden on the income of the permanent establishment is substantially lower than the tax burden of the Cypriot resident in the Republic.
  • The profit from the disposal of securities is exempt from tax irrespective of whether it is of capital or trading nature.  Securities include shares, government stocks, debentures, bonds, founder’s shares and rights thereof and other financial instruments.
  • The whole of interest income.  Interest income, which is received in the ordinary course of a business, including interest closely connected to the ordinary course of business, is not exempt but is included in the taxable income of the business (see also, special contribution for defence law provisions in relevant section above).
  • The lower of 20% of the remuneration from an employment, which is exercised in the Republic by a person who was a non-resident before the commencement of his employment, and €8.543.  This exemption applies for a period of three years from 1 January of the year following the year in which the employment commenced.
  • The emoluments from salaried services performed abroad for an aggregate period in the tax year exceeding 90 days, for a non resident employer.

Personal Allowances

In calculating the taxable income, certain personal allowances are deductible, namely the contributions to the Social Insurance Fund, approved provident funds, medical funds, General Medical Plan, or other approved plans, as well as insurance premiums to insurance companies for the life assurance of the taxpayer.