Taxes in Cyprus

Cyprus, strategically located at the crossroads of Europe, Asia, and Africa, has established itself as a prominent business and financial hub. Understanding the tax landscape is crucial for individuals and businesses looking to thrive in this Mediterranean island nation. Below is an overview of the various taxes that need to be paid in Cyprus.


Corporate Income Tax (CIT):

The standard corporate tax rate is 12.5%, making Cyprus one of the most attractive jurisdictions for international business.


Personal Income Tax:

Residents in Cyprus are taxed on their worldwide income, while non-residents are taxed only on income earned within the country.

The progressive tax rates for individuals range from 0% to 35%, with various exemptions and deductions available.


Value Added Tax (VAT):

Cyprus imposes VAT on the supply of goods and services. The standard rate is 19%, with reduced rates of 5% and 9% applicable to specific categories such as tourism-related services and certain goods.

Certain transactions, like the sale of certain immovable property, may be exempt from VAT.


Capital Gains Tax (CGT):

CGT is applicable on the disposal of immovable property in Cyprus. Exemptions are available for the sale of a private residence under specific conditions.

The rate of CGT is 20%, and individuals can benefit from an annual exemption threshold.


Special Defense Contribution (SDC):

SDC is imposed on the dividend and interest income of Cyprus tax residents.

The rates for SDC are 17% on interest income and 30% on dividend income. However, certain exemptions and reductions may apply.


Social Insurance Fund (SIF) and General Healthcare System (GHS) Contributions:

Both employees and employers are required to contribute to the Social Insurance Fund.

The General Healthcare System contributions fund the national healthcare system.


Immovable Property Tax:

Although immovable property tax was abolished in 2017, there may be municipal taxes imposed on property owners.


Stamp Duty:

Stamp duty is applicable to various transactions, including the transfer of real estate, certain legal documents, and share transactions.


Shipping Tonnage Tax:

Cyprus offers an attractive tonnage tax system for qualifying shipping companies, providing a favorable regime for the shipping industry.





June 2024