Cyprus (CY)
Cyprus is a Mediterranean island nation and EU member state situated at the crossroads of Europe, Asia and Africa.
Tax & Payslip Guide
Understanding your taxes in Cyprus — tax year January 1 – December 31.
📊 Income Tax Brackets
| Income from | Income to | Rate | Notes |
|---|---|---|---|
| 0 | 19,500 | 0% | Tax-free allowance — no income tax payable. |
| 19,501 | 28,000 | 20% | First taxable band. |
| 28,001 | 36,300 | 25% | Second taxable band. |
| 36,301 | 60,000 | 30% | Third taxable band. |
| 60,001 | ∞ | 35% | Top rate — applies to income above €60,000. |
🏛️ Social Contributions
Both employee and employer contribute 8.8% of gross salary (2026). Covers pension, sickness, maternity and unemployment benefits. Annual ceiling: €62,868 (2026).
Mandatory health insurance contribution funding the GESY public healthcare system. Employee pays 2.65%, employer 2.90% of gross salary. No income ceiling.
Employer-only contribution for redundancy payments fund.
Employer contribution to the Human Resource Development Authority training fund.
Applies only to specific sectors. Most employers not in these sectors are exempt.
Cyprus residents 'domiciled' in Cyprus pay SDC on passive income (dividends, interest, rents). Non-Domicile status holders are fully exempt for up to 17 years. This is one of Cyprus's most valuable tax benefits for foreign nationals.
🛒 VAT Rates
Some services have specific rates: 0% for exports and certain financial services. Check the Tax Department website for full schedules.
🧾 Sample Payslip Decoder
🌍 Special Expat Tax Rules
Cyprus has multiple world-class tax incentives for expats and businesses. (1) Non-Domicile Status: Foreign nationals who become tax resident in Cyprus are automatically Non-Domiciled for 17 years. Non-Doms pay zero Special Defence Contribution (SDC) on dividends and interest — potentially saving tens of thousands annually for investors and business owners. (2) 60-Day Tax Residency Rule: Uniquely, you can become a Cyprus tax resident with just 60 days' presence per year (vs 183 days elsewhere) if you: have no other tax residency, spend at least 60 days in Cyprus, have a business/employment in Cyprus, and maintain a permanent home in Cyprus. (3) 50% Exemption for New Employees: Individuals first employed in Cyprus (earning €55,000+/year) receive a 50% income tax exemption for 10 years. (4) IP Box Regime: Qualifying income from intellectual property (patents, software, royalties) taxed at an effective rate of just 2.5%. (5) Re-domiciliation of companies is straightforward with full EU legal protection.
📋 Double Tax Treaties
Cyprus has double taxation treaties with 65+ countries including UK, USA, Russia, Germany, France, India, China, UAE, Canada, Australia, South Africa, and most EU member states. The UK-Cyprus treaty is particularly important for British expats.
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