Individual taxation | TechIsland

This section was updated in March 2026 with the support of the tax-experts team of TaxAppCy.

Basis of Taxation

Individuals who are tax residents in Cyprus are taxed on their worldwide income, i.e. on all income accrued or derived from all sources in Cyprus and overseas, regardless of whether this income is actually transferred to Cyprus or not.

Tax resident individuals whose domicile is not in Cyprus are exempt from the Special Defense Contribution - this kind of taxation applies to dividend income and interest income earned from sources in Cyprus and abroad. Foreign nationals coming to live and work in Cyprus are expected to fall within this (‘non-dom regime) category and are strongly advised to obtain the relevant certificate

Significant tax exemptions (20% / 50%) apply on income from employment of foreign individuals who take up residency in Cyprus.

Tax residence of an individual in accordance with Cypriot tax legislation

An individual is considered a tax resident of Cyprus if he/she spends more than 183 days in any calendar year (same as the tax year) in Cyprus.

A second tax residency test - otherwise known as the “60-days rule” - was introduced for the use of all tax residents and has been in effect since 1 January 2017. As per the ‘’60-days rule’’ an individual is considered a tax resident of Cyprus if he / she within a calendar year: 1. is physically present for more than 60 days in Cyprus, 2. does not spent more than 183 days outside Cyprus 3. carries on a business in Cyprus and/or is employed in Cyprus and/or holds an office (e.g. directorship), and 4. maintains a permanent residential property in Cyprus (owned or rented)

Personal Income Tax Rates

The following income tax rates apply to individuals:

Chargeable Income for the Tax Year	Tax Rate	Accumulated Tax
Euro (€)	%	Euro (€)
0 - 22.000	nil	nil
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%

Exemptions

The following are exempt from Cyprus income tax:

Type of income	Exemption
Interest	The whole amount* Interest income received by individuals is generally not subject to personal income tax but may instead fall under the Special Defence Contribution (SDC) regime - refer to the Special Contribution for Defence section.
Dividends	The whole amount* Dividend income may be subject to Special Contribution for Defence - refer to the Special Contribution for Defence section
Remuneration for first employments exercised in Cyprus commencing as from 1 January 2022 with remuneration exceeding EUR55.000 by individuals who were not residents of Cyprus for a period of 10 or 15 consecutive tax years immediately prior to the year of commencement of the employment in Cyprus. For each individual, the exemption will apply once in their lifetime for a period of 17 years. Subject to certain conditions, individuals whose employment commenced prior to 1 January 2022 may also be eligible to claim the exemption.	50% of the remuneration
Remuneration for first employments exercised in Cyprus commencing after 26 July 2022, by individuals who immediately prior to the commencement of their employment in Cyprus were not a resident of Cyprus for a period of at least 3 consecutive tax years and were employed outside of Cyprus by a non-resident employer. For each individual, the exemption will apply for a period of 7 years, starting from the tax year following the tax year of commencement of employment. Individuals granted the above 50% exemption will not be eligible for this exemption at the same time (may alternate between them).* (Individuals that were eligible to claim the 20% or 50% exemptions that applied pre-1 January 2022 may continue to claim the said exemption for any remaining period if they are not eligible to claim the exemption for employments commencing from 1 January 2022. The 20% and 50% exemptions that applied pre-1 January 2022 were available for a total period of 5 or 10 years, respectively, for each individual)	20% of the remuneration with a maximum amount of €8.550 annually
Remuneration from salaried services rendered outside Cyprus for more than 90 days in a tax year to a non-Cyprus resident employer or a foreign permanent establishment of a Cyprus resident employer	The whole amount
Ex gratia payments in relation to retirement (including early retirement) or termination of employment or office (including early termination) or benefits granted through an Early Retirement Scheme	Any amounts exceeding EUR 200.000 are taxed at a 20% rate
Capital sums accruing to individuals from any payments to approved funds (e.g. provident funds)	The whole amount
Profits from the sale of securities	The whole amount

Tax Deductions

The following are deducted from income:

Type of Deduction	Allowable Income
Contributions to trade unions or professional bodies	The whole amount
Loss of current year and previous years (for individuals required to prepare audited financial statements, current year losses and losses of the previous seven years only may be deducted).	The whole amount
Rental Income	20% of rental income (for income tax purposes)
Donations to approved charities (with receipts)	The whole amount
Social Insurance, medical fund (maximum 1,5% of remuneration), pension and provident fund contributions (maximum 10% of remuneration) and life insurance premiums (maximum 7% of the insured amount)	Up to 1/5 of the chargeable income
Dependent Children/Students (up to 24 years old)	€1.000 (1^st), €1.250 (2^nd), €1.500 (3^rd +) per parent, married/civil partner, single person. Double for single parents.
Housing (Rent/Interest on Mortgage)	Up to €2.000 per parent, married/civil partner, single person.
Green Transition (EV/Solar/House insulation)	Up to €1.000 per parent, married/civil partner, single person (Carry-forward up to 4 years possible).
Home Insurance (Primary, rental or holiday house)	Up to €500 per parent, married/civil partner, single person.
Disability Insurance	Premiums up to 7% of insurance coverage per policy holder.

Special Defence Contribution (‘SDC’) 

Special Contribution for Defence is imposed on dividend income, and interest income earned by individuals tax resident and domiciled in Cyprus. Cyprus tax resident and non-domiciled individuals are exempt from SDC. It is charged at the rates shown in the table below:

Type of Income	Tax Rate
Dividend income from Cyprus and non-Cyprus tax resident companies – assuming the recipient is Cyprus tax resident and domiciled	5%

General Health Care System

As per the General Health System Law of 2001 (89(I)/2001 as amended in 2017, a general health system was introduced in Cyprus aiming to provide to the population with equal access to a holistic healthcare system. Patients will have the option to select a healthcare provider from the private as well as the public healthcare sector.

Contributions relating to the implementation of the General Health System (NHS) started on 1 March 2019, and the current rates are as per the table below:

Reference	Category	Applied On	Rate
(i)	Employees	Own emoluments	2,65%
(ii)	Employers	Employee’s emoluments	2,90%
(iii)	Self Employed	Own income	4,00%
(iv)	Pensioners	Pension	2,65%
(v)	Persons Holding Office	Officer’s Remuneration	2,65%
(vi)	The Republic of Cyprus or Natural / Legal Person responsible for the remuneration of persons holding an office	Officers’ Remuneration	2,90%
(vii)	Persons earning rental, interest, dividend and other income	Rental, Interest, Dividend Income etc	2,65%
(viii)	Republic’s Consolidated Fund (Πάγιο Ταμείο της Δημοκρατίας)	Emoluments / Pensions / Persons (i), (iii) (iv) & (v)	4,70%

Other Taxes

Capital Gains Tax (CGT) is imposed (where the disposal is not subject to income tax) at the rate of 20% on gains from the disposal of immovable property situated in Cyprus, including gains from the disposal of shares in companies which directly own such immovable property. Further, shares of companies which indirectly own immovable property located in Cyprus and at least 20% of the market value of the said shares derive from such immovable property are subject to Capital Gains Tax. In the case of share disposals, only that part of the gain relating to the immovable property situated in Cyprus is subject to CGT. Disposal for the purposes of CGT specifically includes: exchange, leasing, gifting, abandoning the use of right, granting a right to purchase, and any sums received upon cancellation of disposals of property. Shares listed on any recognised stock exchange are excluded from these provisions.

Exemptions

The following disposals of immovable property are not subject to CGT:

 •Lifetime exemptions: General exemption for a natural person: EUR 30.000 (up from EUR 17.086), Agricultural land exemption: EUR 50.000 (up from EUR 25.629) and Primary residence exemption: EUR 150.000 (up from EUR85.430).

• Subject to conditions, land as well as land with buildings, acquired at market value (excluding exchanges, donations, and foreclosures) from unrelated parties in the period 16 July 2015 up to 31 December 2016 will be exempt from CGT upon their future disposal.

 • Transfers arising on death.

 • Gifts made from parent to child or between husband and wife or between up to third-degree relatives.

 • Gifts to a company where the company’s shareholders are members of the donor’s family and the shareholders continue to be members of the family for five years after the day of the transfer.

 • Gifts by a family company to its shareholders, provided the company originally acquired such property by way of gift. The property must be kept by the donee for at least three years.

 • Gifts to charities and the Government.

 • Transfers as a result of reorganisations.

 • Exchange or disposal of immovable property under the Agricultural Land (Consolidation) Laws.

 • Expropriations

 • Exchange of properties, to the extent that the gain made on the exchange has been used to acquire the new property. The gain that is not taxable is deducted from the cost of the new property, i.e. the payment of tax is deferred until the disposal of the new property.

 • Donations to a political party

Social insurance and other contributions

Individuals working in Cyprus, either employed or self-employed, are required to contribute to the social insurance scheme subject to certain exemptions. As from 1 January 2024, the rate of 8,8% applies to both the employer and the employee.

As from 1 January 2024, the contributions of self-employed persons are 16,6% of their income (15,6% for 2019-2023). Thereafter, the rate will increase every five years until it reaches 10.3 as from 1 January 2039. The amount of the contributions is subject to a lower and a maximum limit, depending on the profession or trade of the Self-Employed Person. These limits are set on an annual basis.

Estate duty, wealth tax and inheritance tax

There is no gift tax, estate duty, wealth tax or inheritance tax in Cyprus.

Value Added Tax (VAT)

VAT is imposed on the supply of goods and provision of services in Cyprus, as well as on the acquisition of goods from the EU and the importation of goods into Cyprus. Taxable persons charge VAT on their taxable supplies (output tax) and are charged VAT on goods or services which they receive (input tax). If the output tax in a VAT period exceeds total input tax, a payment has to be made to the state. If input tax exceeds the output tax, the excess input tax is carried forward as a credit and set off against future output VAT.

The legislation provides for the following VAT rates: 

• Zero rate (0%) 

• Super-reduced rate of three per cent (3%)

• Reduced rate of five per cent (5%)

 • Reduced rate of nine per cent (9%)

 • Standard rate 19%

Exemptions

Certain goods or services are exempt from VAT. They include: 

• leasing of buildings used for residence. 

• most banking, financial services and insurance services.

• most hospital, medical and dental care services.

• certain cultural, educational, and sports activities.

• supplies of buildings, subject to conditions.

• postal services provided by the national postal authority.

• lottery tickets and betting coupons for football and horse racing.

• management services provided to mutual funds