Income Tax – Individual
Individual resident in Cyprus are liable to income tax in accordance with the Income Tax Law (Law No. 118(I) of 2002 , as amended) in respect of their worldwide income. An individual is resident in Cyprus, if he/she resides therein for a period or more which in aggregate exceed 183 days. Non- tax residents are liable to tax in respect of Cyprus source income only. However, non-tax residents having a permanent establishment in Cyprus may elect, if it is to their benefit, to be taxed in accordance with the provisions applicable to tax residents. The income liable to income tax includes, inter alia, trade income, income from salaried services, pensions, interest, dividends, royalties, any amounts of trade goodwill, etc. The Law stipulates for various exemptions, provided certain conditions are satisfied.
The computation of residence in Cyprus is based on the following principles :
- A day of departure from Cyprus is considered as a day outside the republic.
- A day of arrival in Cyprus is considered as a day in the republic.
Tax Exemptions
| Personal tax Rates (year 2008) | |||
|
Taxable Income € |
Tax Rate % |
Tax on rate € |
Cumulative Tax € |
| 0 – 19.500 | Nil | — | — |
| 19.501 – 28.000 | 20 | 1.700 | 1.700 |
| 28.001 – 36.300 | 25 | 2.075 | 3.775 |
| 36.301 – 60.000 | 30 | 7.110 | 10.885 |
| 60.001 and over | 35 | ||
|
Pensions Received from Abroad Note : Regarding the pensions received from abroad, there is an option to choose to be taxed either at normal rates or at the special mode of taxation as above |
|
|
Taxable Pensions € |
Tax Rates % |
| Up to 3.417,20 | Nil |
| Over 3.417,00 | 5 |
|
|
Limit of Exemption |
| Interest Income | All |
| Dividends Income | All |
| Lump sum received in the form of bonus on retirement, on computation of pension, as a bonus on death or as compensation on death or pesonal injury | All |
| Capital sum received from insurance or approved provident funds | All |
| Widow pensions | All |
| Individuals who were not Cypriot residents before the commencement of their employment are allowed after the first year an exemption of 20% of their emoluments with maximum amount € 8.543,01 annually. This exemption can be used for 3 years commencing from 1st January following the first year of employment | All |
| Deposits with Housing Finance Corporation (The Exemption applies to deposit schemes, which existed as at 30 April 2003) | 40% of the amount deposited. The deposited amount connot exceed 25% of person’s total income |
Tax Deductions
The Following are deducted from Income:
|
Contributions to trade unions or professional bodies |
All |
|
Loss of current year and previous years, but not loss incurred due to donations or contributions |
All |
|
Donations to approved foundations (with receipt) |
All |
|
Rental Income |
20% of gross rental income |
|
Expentiture incurred for the maintenance of listed buildings for which there has to be either a Preservation order or certificate by the Minister of Interior that the expenses are in respect of preservation work for restoring the building |
Up to €700 – €1.100 and €1.200 per square meter (depending on the size of the building) |
|
Social Insurance, provident fund, medical fund, pension fund contributions and life insurance premiums (the allowable annual life insurance premium is restricted to 7% of the insured amount) |
The total amount of deduction is restricted to 1/5 of taxable income |
Tax Rates for Income Tax from 1991
Individuals
|
% |
Tax Years |
|||
|
1991-1995 £ |
1996-1999 £ |
2000-2001 £ |
2002 £ |
|
|
0 |
0 – 2 000 |
0 – 5 000 |
0 – 6 000 |
0 – 9 000 |
|
20 |
2 001 – 4 000 |
5 001 – 8 000 |
6 001 – 9 000 |
9 000 – 12 000 |
|
25 |
— |
— |
— |
12 001 – 15 000 |
|
30 |
4 001 – 8 000 |
8 001 – 11 000 |
9 001 – 12 000 |
15 001 & Over |
|
40 |
8 001 & over |
11 001 & over |
12001 & over |
— |
|
% |
Tax Years |
|||
|
2003 £ |
2004 – 2006 £ |
2007 £ |
2008 / 2012 € |
|
|
0 |
0 – 9 000 |
0 – 10 000 |
0 – 10 750 |
0 – 19 500 |
|
20 |
9 001 – 12 000 |
10 001 – 15 000 |
10 751 – 15 750 |
19 501 – 28 000 |
|
25 |
12 001 – 15 000 |
15 001 – 20 000 |
15 751 – 20 600 |
28 001 – 36 300 |
|
30 |
15 001 & Over |
20 001 & Over |
20 600 & over |
36 301 – 60.000 |
|
35 |
— |
— |
— |
60.001 and over |
Tax Rates for Income Tax from 1991
| £ | 1991 –1995 | 1996 – 2002 | 2003 – 2004 | 2005 – 2007 |
| 0 – 40 000 | 20% (1,2) | 20% (1,2) | 10% (3,4) | 10% (3,4,5) |
| 40 000 – 100 000 | 25% (1,2) | |||
| 100 001 – 1 000 000 | 25% (1,2) | |||
| 1 000 001 and over | 15% (5,6) |
The information contained in this Site has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this newsletter. PanAudit Konnaris Limited would be pleased to advise readers on how to apply the principles set out in this newsletter to their specific circumstances. PanAudit Konnaris Limited accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of any material in this newsletter.
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