Tax & Accounting
Tax Services for Individuals in Cyprus
Expert personal tax advisory services in Cyprus. We handle income tax returns, tax planning, residency structuring, and compliance for individuals under Cyprus tax law.
4.9(366+ Google Reviews)42+ Years of Experience
Free consultation · No commitment · We respond within 24 hours
Reviewed by Sergios Charalambous, Partner
How It Works
Step 01
Financial Review
Assess your current financial position, identify tax planning opportunities, and understand your obligations.
Step 02
Setup & Compliance
Register for VAT, set up bookkeeping systems, and establish reporting workflows tailored to your business.
Step 03
Ongoing Management
Handle filings, prepare financial statements, submit returns, and provide continuous tax advisory support.
What's Included
What's Included
- Personal income tax return preparation
- Tax residency assessment and planning
- Non-dom status application assistance
- Double-tax treaty benefit claims
- Capital gains tax advisory
- Social insurance contribution management
Accounting and audit
from €2,100 a year
Bookkeeping, VAT, payroll and the annual audit on one fixed annual fee, set by your transaction volume.
Fixed fee, written into your engagement letter before you pay. A Cyprus-based accountant replies within 24 hours.
In-Depth Guide
Personal Income Tax in Cyprus: A Complete Overview
Cyprus operates a progressive personal income tax system that applies to the worldwide income of individuals who are tax residents of the Republic. Non-residents are subject to tax only on income arising from sources within Cyprus. The system is governed by the Income Tax Law (Law 118(I)/2002, as amended) and is administered by the Tax Department of the Ministry of Finance.
For individuals considering relocating to Cyprus or those already resident on the island, understanding the personal tax framework is essential for effective financial planning. Cyprus offers a competitive tax environment compared to many other European jurisdictions, with a generous tax-free threshold and a number of valuable exemptions that can significantly reduce an individual's overall tax liability.
Progressive Income Tax Rates
Personal income tax in Cyprus is levied at progressive rates on an individual's total taxable income. The current tax bands, applicable from the 2026 tax year onwards, are as follows:
| Taxable Income (EUR) | Tax Rate | Cumulative Tax (EUR) |
|---|---|---|
| 0-22,000 | 0% | 0 |
| 22,001-32,000 | 20% | 2,000 |
| 32,001-42,000 | 25% | 4,500 |
| 42,001-72,000 | 30% | 13,500 |
| Over 72,000 | 35% | 13,500 plus 35% on the excess |
The first €22,000 of annual income is entirely exempt from income tax. This is one of the most generous personal allowances in the European Union and means that many individuals with modest income levels may owe little or no income tax at all. The top marginal rate of 35% applies only to income in excess of €72,000, which is moderate compared to jurisdictions such as France, Germany, or the Scandinavian countries where top rates frequently exceed 45%.
Special Tax Exemptions for New Employees and Residents
Cyprus law provides two particularly attractive exemptions designed to encourage individuals to relocate to the island and take up employment:
50% Exemption for High-Earning New Employees
Under Article 8(23A) of the Income Tax Law, individuals who take up employment in Cyprus for the first time and whose annual remuneration from that employment exceeds €55,000 are entitled to a 50% exemption on their employment income. For employments commencing from 1 January 2022 onwards, this exemption applies for a period of 17 consecutive years from the year employment commences. This effectively halves the taxable employment income, resulting in significant tax savings for high-earning expatriates and professionals relocating to Cyprus.
To qualify, the individual must not have been a tax resident of Cyprus for at least 15 consecutive tax years immediately prior to commencing their first employment in Cyprus. The exemption applies regardless of the individual's nationality and is available to both EU and non-EU citizens.
20% Exemption for New Residents (up to €8,550)
Under Article 8(21A) of the Income Tax Law, individuals who were not tax resident in Cyprus before commencing employment on the island are entitled to a 20% exemption on their employment income, capped at a maximum of €8,550 per annum. This exemption was originally available for a period of five years but has been extended. It is available to individuals who do not qualify for the 50% exemption described above (i.e., those earning less than €55,000 per year). The two exemptions cannot be claimed simultaneously.
Special Defence Contribution (SDC) and GHS Contributions
In addition to personal income tax, individuals who are both tax resident and domiciled in Cyprus are liable to Special Defence Contribution (SDC) on certain types of passive income. The SDC rates are:
- Dividend income: 5%
- Passive interest income: 17% (SDC only; no longer subject to income tax)
- Rental income: No longer subject to SDC (abolished from 2026; subject to income tax only)
Individuals who are tax resident but not domiciled in Cyprus (non-doms) are fully exempt from SDC on all of the above income categories. This is one of the principal advantages of the Cyprus non-domicile regime for individuals with significant investment or passive income.
The General Healthcare System (GHS/GESY) contribution is also levied on certain income categories. Employees contribute 2.65% of their gross salary, while employers contribute 2.90%. Self-employed individuals contribute 4.00% of their income. GHS contributions are also applied to dividend, interest, and rental income for domiciled individuals at a rate of 2.65%, subject to an annual cap of €180,000 on total contributory income.
Tax Filing Deadlines and Compliance
Individuals in Cyprus must comply with the following tax filing requirements:
- Temporary Tax Declaration (TD1): Self-employed individuals and persons with income not subject to PAYE withholding must submit a temporary tax estimate by 1 July of the tax year, with tax payable in two equal instalments on 31 July and 31 December.
- Annual Income Tax Return (TD1): Must be filed electronically by 31 July of the year following the tax year (e.g., the 2024 return is due by 31 July 2025). Employees whose only income is employment income subject to PAYE and which does not exceed €22,000 may be exempt from filing.
- PAYE (Pay As You Earn): Employers are required to withhold income tax from employees' salaries on a monthly basis and remit it to the Tax Department.
- Late filing penalties: Late submission of tax returns incurs a penalty of €100 for each return, increasing to €200 for returns submitted more than three months late, plus interest on any unpaid tax.
Allowable Deductions and Credits
Individuals may claim the following deductions against their taxable income:
- Social insurance contributions: Employee contributions to the Social Insurance Fund are deductible.
- Approved provident fund contributions: Contributions to approved provident funds and pension schemes are deductible, subject to limits.
- Donations to approved charities: Donations to registered charities and the Cyprus government are fully deductible.
- Trade union subscriptions: Subscriptions paid to registered trade unions are deductible.
- Rental income expenses: Individuals receiving rental income may deduct 20% of gross rental income as a notional expense allowance, or claim actual expenses incurred, whichever is more favourable.
- Life insurance premiums: Premiums paid on life insurance policies are deductible up to a proportion of the insured amount (generally one-sixth of the net taxable income).
Tax Residency and Its Impact on Taxation
Whether an individual is classified as a tax resident of Cyprus determines the scope of their tax obligations. Tax residents are liable to income tax on their worldwide income regardless of where it is earned, while non-residents are taxed only on income derived from Cyprus sources. Tax residency can be established under either the traditional 183-day rule (physical presence in Cyprus for 183 or more days in a calendar year) or the 60-day rule, which requires only 60 days of presence subject to additional qualifying conditions.
Proper structuring of tax residency can have a material impact on an individual's overall tax position, particularly for internationally mobile individuals, entrepreneurs, and investors with income sources in multiple jurisdictions. Our team advises clients on the optimal residency strategy to minimise their global tax burden while maintaining full compliance with all applicable laws.
Our Personal Tax Services
Philippou Law Firm provides a comprehensive suite of personal tax services to individuals in Cyprus, including:
- Tax return preparation and filing: We prepare and submit annual income tax returns for employees, self-employed individuals, directors, and investors, ensuring accuracy and timely compliance.
- Personal tax planning: We develop tailored tax strategies to help individuals minimise their tax liability through the efficient use of exemptions, deductions, and reliefs available under Cyprus law.
- Tax residency structuring: We advise on establishing and maintaining tax residency in Cyprus under either the 183-day or 60-day rule, taking into account the individual's personal and business circumstances.
- Non-domicile status advisory: We assist clients in establishing and maintaining non-domiciled status to benefit from exemption from SDC on passive income (the GHS contribution of 2.65% still applies).
- Compliance and representation: We represent clients in correspondence with the Tax Department, handle tax assessments, objections, and appeals, and ensure ongoing compliance with all filing and payment obligations.
- Cross-border tax advisory: For internationally mobile individuals, we coordinate with advisors in other jurisdictions to manage double taxation issues and optimise the global tax position.
Whether you are a newly arrived expatriate, a long-term resident, or a non-resident with Cyprus-sourced income, our experienced tax team can help you navigate the Cyprus personal tax system with confidence. Contact us today for a confidential consultation.
Frequently Asked Questions
Cyprus applies a progressive income tax system with five bands. The first €22,000 is tax-free at 0%. Income from €22,001 to €32,000 is taxed at 20%, from €32,001 to €42,000 at 25%, from €42,001 to €72,000 at 30%, and income exceeding €72,000 is taxed at 35%. These rates apply to the worldwide income of Cyprus tax residents.
Individuals who take up employment in Cyprus for the first time and earn more than €55,000 per year from that employment are eligible for a 50% exemption on their employment income for 17 consecutive years. The individual must not have been a Cyprus tax resident in the three years immediately preceding the year of commencement of employment. This incentive applies to employments commencing from 1 January 2022 onwards.
The annual personal income tax return (Form TD1) must be filed electronically by 31 July of the year following the relevant tax year. For example, the tax return for the 2024 tax year is due by 31 July 2025. Late filing incurs a penalty of €100, increasing to €200 if the return is submitted more than three months late, plus interest on any unpaid tax.
Dividends received by individuals are exempt from personal income tax in Cyprus. However, individuals who are both tax resident and domiciled in Cyprus are subject to Special Defence Contribution (SDC) at 5% on dividend income (reduced from 17% as of 2026), plus GHS contributions of 2.65%. Individuals who are tax resident but non-domiciled are exempt from SDC on dividends; only the GHS contribution of 2.65% (capped at €180,000 of annual income) still applies.
You can become a tax resident of Cyprus under two rules. The traditional 183-day rule requires physical presence in Cyprus for at least 183 days in a calendar year. Alternatively, the 60-day rule requires spending at least 60 days in Cyprus, provided you do not spend more than 183 days in any other single country, you carry on a business or are employed or hold office in a Cyprus company, and you maintain a permanent residence in Cyprus. Since the 2026 reform, being tax resident in another country no longer prevents 60-day qualification.
Employees in Cyprus contribute 8.8% of their gross insurable earnings to the Social Insurance Fund, while employers contribute 8.8%. There is also a redundancy fund contribution of 1.2% (employer only), an industrial training levy of 0.5% (employer only), and a social cohesion fund contribution of 2% (employer only). In addition, employees pay GHS contributions of 2.65% on their gross salary, and employers pay 2.90%.
Yes. Individuals who receive rental income in Cyprus can deduct either 20% of gross rental income as a flat-rate notional expense, or actual expenses incurred in producing the rental income, whichever is more beneficial. Allowable actual expenses include repairs and maintenance, property management fees, insurance, and loan interest on borrowings used to acquire the property. The net rental income after deductions is then subject to income tax at the individual's marginal rate.
Individuals who were not tax resident in Cyprus before commencing employment on the island and who earn less than €55,000 per year (thus not qualifying for the 50% exemption) may claim a 20% exemption on their employment income, capped at a maximum annual benefit of €8,550. This exemption is designed to encourage individuals to relocate to Cyprus for employment and provides meaningful tax relief during the initial years of residence.
Book a Free Consultation
We typically respond within 24 hours.
What Our Clients Say
Trusted by individuals and businesses across the globe.
4.9(366+)Read Google Reviews“I have had a very positive experience working with Angeliki and the team at Polycarpos Philippou & Associates LLC. Angeliki is highly professional, extremely responsive, and always very clear in her communication. She replies incredibly fast and makes complex administrative and tax related matters easy to understand.”
Kevin Koch
Corporate and tax services
“We had a wonderful experience working with Evangelia Katsigianni during our Cyprus tax residency (Yellow Slip) application process. She was incredibly helpful, friendly, and professional throughout, always taking the time to answer our questions and guide us through each step. We are very grateful for her assistance.”
Danny Schultz
Tax residency
Free Consultation
Ready to Get Started?
Book a free, no-obligation consultation with one of our experienced lawyers. As one of the most established law firms in Paphos, we're here to help you navigate the legal landscape of Cyprus with confidence.
No fees. No obligations. Speak with a qualified lawyer today.
Related Services
Cyprus Non-Dom Tax Regime & Tax Residency
Complete guide to the Cyprus non-domiciled tax regime and tax residency rules. Learn about SDC exemption, the 60-day rule, and how to obtain non-dom status.
Accounting & Audit Coordination for Companies in Cyprus
Professional accounting, bookkeeping, VAT compliance, and statutory audit coordination with licensed external auditors for Cyprus companies. Full compliance with Companies Law Cap.113 and IFRS.
Cyprus IP Box Regime
Leverage the Cyprus IP Box regime for an effective 3% tax rate on qualifying IP profits. OECD nexus approach compliant, covering patents and software.
Related Articles
Tax
The Cyprus 60 Day Tax Residency Rule (2026 Guide)
Cyprus lets you become a tax resident while spending as little as 60 days a year on the island. The 2026 reform made the 60 day rule even more flexible: you now qualify even if you remain tax resident in another country. This guide covers the current conditions, day counting, and the Non Dom benefits.
Tax
How a Cyprus International Trust Protects Your Crypto
In a world where cryptocurrencies are revolutionizing finance, investors and businesses are facing increasingly complex regulatory and tax challenges, with several countries moving towards dramatic...
Tax
Cryptocurrency Tax in Cyprus: Individuals & Firms
Cyprus has become an attractive destination for cryptocurrency investments, offering a favorable tax environment and low tax rates, especially for companies. As cryptocurrency usage increases...