Cyprus Tax Overview 2025

Updated: May 18, 2025

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Cyprus has become one of Europe’s most attractive jurisdictions for both individals and businesses thanks to:

🔹 One of the lowest corporate tax rates in the EU (12.5%)

🔹 A fair, transparent, and EU-aligned tax framework

🔹 Multiple exemptions and incentives for residents and foreign investors​​

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At Ermina Papasolomou Co & LLC, our tax specialists help individuals and companies understand their obligations while making use of the many benefits Cyprus offers.​

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📑General Framework of Cyprus Taxation

​The Cyprus tax system is widely recognised for its transparency and investor-friendly structure.
Key features include:

🗓 Tax year: January 1 – December 31 (calendar year)

👩‍👩‍👧 Separate taxation: Husbands and wives are taxed individually

🤝 Partnerships: Not taxed as a whole; each partner pays individually

🧾 Tax law: The same rules apply to individuals (natural persons) and companies (legal entities)​​

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Cyprus is considered one of the most competitive jurisdictions in the EU, attracting businesses and individuals seeking efficient tax planning.

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👤 Income Tax for Individuals

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📍 Who is a Tax Resident in Cyprus?

You are considered a tax resident if:

1. You spend 183+ days per year in Cyprus; OR

2. You spend 60+ days, provided that you:

   • Are not a tax resident elsewhere,

   • Maintain a permanent home in Cyprus,

   • Carry out business or employment activities in Cyprus.

 

​💶 Personal Income Tax (PIT) Rates (2025)​

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📌 Income subject to tax includes:

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• Salaries & wages

• Business and trade profits

• Rental income

• Pensions & annuities

• Property-related profits

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Foreign artists and sports professionals pay a flat 10% tax on Cyprus income.

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🌍 High Earners Moving to Cyprus

Individuals earning over €100,000 annually benefit from a 50% tax exemption for the first 10 years of Cyprus tax residency — a major incentive for executives, investors, and professionals relocating to Cyprus.​

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👨‍💼 Self-Employed Individuals

Self-employed persons must:

• Pay 15.6% social insurance contributions

• File income estimations by 31 July

• Pay taxes in 2 instalments (31 July & 31 Dec)

• Prepare audited financial statements if income exceeds €70,000

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👔 Employers & Employees (Social Insurance)​

• Before Dec 2023 → Both paid 8.3% each.

• Since Jan 2024 → Both pay 8.8% each, and the State contributes 5.2%.

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🏢 Corporate Tax in Cyprus

Cyprus offers one of the lowest corporate tax rates in the EU: 12.5%.

 

Who pays?

• Companies managed and controlled in Cyprus (tax residents)

• Non-resident companies pay only on Cyprus-source income or profits from a Permanent Establishment (PE)

 

Exemptions (no corporate tax):

• Dividend income

• Profits from sale of securities

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📌 Annual Requirements:​

• Submission of audited financial statements

• Filing of the annual tax return by 31 December

• Accurate bookkeeping and compliance with Cyprus tax regulations

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🏠 Tax on Rental Income

Cyprus tax residents earning rental income must pay:

• Income Tax (if total income > €19,500)

• Special Defence Contribution (SDC): 3% on 75% of gross rent

• GeSy contribution: 2.65% (except for companies)

• VAT (19%) — only if the tenant conducts taxable business activity

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📌 20% of gross rental income is automatically deductible.

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🛡 Special Contribution for Defence (SDC)

Applies to:

• Dividends

• Interest

• Rental income

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Individuals pay SDC if they are:
✔ Cyprus tax residents and
✔ Cyprus domiciled persons

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Companies pay SDC if they are tax residents of Cyprus.

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Non-residents: SDC does not apply.

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🏠 Property & Real Estate Tax

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❌ Immovable Property Tax → abolished in 2017

✅ Instead: Local municipality tax (varies by location and property value)

🔁 Transfer fees: Payable when purchasing land/property (unless VAT already paid)

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🏷 Value Added Tax (VAT)​

• Standard VAT rate: 19%

• Reduced VAT: 5% or 9% (depending on goods/services)

• 5% VAT applies to the first 130m² of a primary residence (if eligible)

• Mandatory registration if turnover exceeds €15,600/year

• VAT filing: Quarterly (4 times per year)

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🏥 General Health System (GeSy)​

• Employees: 2.65%

• Employers: 2.90% of salary

• Self-employed: 4% of income

• Pensioners: 2.65%

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📑 Tax Registration & Payments​

• Income Tax registration → Form T.D. 2001

• VAT registration → Form T.D. 1101

• After registration, you receive a Tax Identification Code (TIC) and, if applicable, a VAT certificate

• All forms are available at mof.gov.cy

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⚖️ Our Tax Services at Ermina Papasolomou Co & LLC

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For Companies

✅ General tax planning & compliance
✅ Filing of corporate tax returns
✅ Advice on tax-efficient structures
✅ Representation before the Cyprus Tax Department
✅ Obtaining Tax Residency Certificates

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For Individuals​

✅ Preparation & submission of personal tax returns
✅ Income Tax, Inheritance Tax, and Capital Gains Tax advice
✅ Clear guidance on deadlines and obligations
✅ Tailored advice for expatriates and high-net-worth individuals​