Zero income tax means that less money is coming out of your paycheck each month, and when tax season c0mes around, you only have to submit a federal return.
How to achieve Zero income tax
The 183-day rule
Someone who spends more tan 183 days in Cyprus in a year will be considered a Cyprus Tax Resident. The days that are spent in and out of the Republic of Cyprus are calculated as the following:
- The day that they leave Cyprus is considered as a day out of the republic.
- The day they arrive is considered as a day within the Republic of Cyprus.
- If they arrive and depart in the Republic of Cyprus, it counts as one day within the Republic.
- If someone departs and arrives in the Republic of Cyprus counts as one day out of the Republic.
- Foreign taxes that have been paid can be credited against the Income Tax liability.
The 60-day rule
As of January 1st, 2017, someone may be considered a tax-resident. This applies when;
- Don’t reside in any other states for 183 days
- Aren’t considered a tax resident by any other state.
- Reside in Cyprus for atleast 60 days.
- Have other ties to Cyprus. This condition must apply when the person carries out business activity in Cyprus. They must either be employed in Cyprus or hold an office for a company tax resident. The person must also have a permanent residential property in the Republic of Cyprus, either rent or ownership.
There are various types of direct taxes that are applicable to someone residing in the Republic of Cyprus;
- Income tax
- Special defense contribution on dividend, interest and income from rentals.
- Capital gains from the selling real estate in the Republic.
Personal Tax rates
| Taxable Income | Rate | Amount |
|---|---|---|
up to €19.500 | zero | zero |
€19.501 – €28.000 | 20% | €1.700 |
€28.001 – €36.300 | 25% | €2.075 |
€36.301 – €60.000 | 30% | €7.110 |
€60.000 – €100.000 | 35% | €14.000 |
€100.000 + | 35% | € – |
Exemptions
| Interest Income. | 100% |
| Dividend Income. | 100% |
| Profits from disposal of shares and other securities. | 100% |
| Profits from permanent establishment abroad under certain conditions. | 100% |
| Foreign pension. | €3.420 |
| Capital sums resulting from any payments to approved funds. | 100% |
| Lump sum received as gratuity for retirement, compensation for death or injury, or computation of pension. | 100% |
| Remuneration (money made from work or from a service) from outside Cyprus to an establishment abroad or a foreign employer for more than 90 days in a tax year. | 100% |
| Remuneration from any office or employment of someone in Cyprus, given that they weren’t a resident of the Republic of Cyprus before starting their employment. This exemption is granted for a period of 10 years, for employments commencing from 1 January 2012 if the annual remuneration exceeds €100.000. (For employments commencing from 01/01/2015 the exemption does not apply. | 50% |
| Remuneration from any office or employment of an individual in Cyprus provided that he was not resident in Cyprus before the Commencement of his employment. For employments commencing during or after 2012 the exemption applies for a period of 5 years starting from the tax year following the year of commencement of the employment. The last eligible year is 2020. (This exemption is granted provided the above 50% exemption is not claimed). | 20% (maximum of €8.550) |
Cyprus Company FAQ
What is the corporation’s tax rate in Cyprus
The corporation tax rate in Cyprus is 12.5% standard Corporate Tax rate.
If the Company is subject to the IP Box the Corporation Tax rate is 2.5%
How much is VAT in Cyprus
The VAT in Cyprus is 19%
If you would like full list of VAT Rules and understanding please visit
VAT ON GOODS EXPLAINED
THE VAT E-COMMERCE AND MOSS EXPLAINED FROM 1ST JANUARY 2019 ONWARD
What types of income tax are directly applicable to someone residing in the Republic of Cyprus?
- Income tax
- Special defense contribution on dividend, interest and income from rentals.
- Capital gains from the selling real estate in the Republic.
What is the 183 day rule?
Someone who spends more tan 183 days in Cyprus in a year will be considered a Cyprus Tax Resident.
What does zero income tax mean?
Zero income tax means that less money is coming out of your paycheck each month, and when tax season c0mes around, you only have to submit a federal return.
Contact us
Where to find us:
81, Griva Digeni Avenue, MARINOS Court, 2nd floor, office 203
P.O. BOx 42656, P.C. 6501, 6043
Larnaca – Cyprus
Tel: +357 24663402 , Fax: +357 24663409
E-mail: admin@cyprusconsultancy.com
