Cyprus, Nicosia

Tax Deductions for Foreigners in Cyprus

Updated: 2 months ago

Individuals working for companies registered in Cyprus are required to pay income tax.

We have already discussed the rate of this tax in a separate article. However, when it comes to foreigners who have become residents of the Republic of Cyprus, tax exemptions are provided for them.

налоговый вычет кипр

Exemption from paying 50% taxes

This discount applies to individuals who started their employment in Cyprus after January 1, 2022. Several conditions must be met.

  • The deduction applies for 17 years, starting from the first month of work.
  • The annual income must exceed 55,000 euros.
  • The taxpayer must not have been a resident of Cyprus for at least 10 years before starting employment.
  • The specified income is considered from the beginning of the calendar year.

An example of calculation for the last point. If the activity started in January, a monthly salary of 4,600 euros (55,200 euros per year) meets the specified parameters. If the activity began in May, the amount of 55,000 euros must be earned in 8 months, and accordingly, be at least 6,875 euros per month.

Further deductions and contributions to various funds are applied, and the tax will be deducted from the tax base after deductions and contributions, as we discussed in a article on income tax in Cyprus.

Exemption from paying 20% taxes

This discount applies to individuals who started employment in the republic after July 26, 2022, with the following conditions.

  • The deduction applies for 17 years, starting from the first month of work.
  • Before starting employment, the taxpayer was not a resident of the Republic of Cyprus for at least 3 years.
  • The work before residency must have been outside the island.
  • The employer before employment in Cyprus must also not have been a resident of the Republic.
  • The deduction is provided from the year following the start of work.

Frequently asked questions about taxation in Cyprus

What is the income tax rate in Cyprus?

Cyprus applies a progressive tax rate — the higher the income, the higher the tax. From 20% for annual income up to 28,000 euros to 35% for income exceeding 60,000 euros per year.

Is there an amount exempt from tax?

Yes, income less than 19,500 euros per year is exempt from tax.

What other contributions need to be paid besides tax?

These are payments to the social insurance fund (8.3% of the employee's salary, but no more than 415.5 euros per month), as well as a contribution to the GESY health fund (2.65%).

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