PERSONAL INCOME TAX

A person who is a tax resident in Cyprus is taxed on worldwide income (Chargeable income accrued or derived from all sources in Cyprus and abroad). A person is regarded to be tax resident in Cyprus if he/she spends in Cyprus more than 183 days in any calendar year. Individuals who are not tax residents of Cyprus are taxed on certain income accrued or derived from sources in Cyprus.

With effect as from 1 January 2017, an individual may also be considered tax resident in Cyprus if (s)he satisfies the “60 day rule”. The “60 day rule” applies to individuals who in the relevant tax year:

1. do not reside in any other single state for a period exceeding 183 days in aggregate, and
2. are not tax resident in any other state, and
3. reside in Cyprus for at least 60 days, and
4. have other defined Cyprus ties. To satisfy this condition the individual
   must carry out any business in Cyprus and/or be employed in Cyprus and/or hold an office (director) of a company tax resident in Cyprus at any time in the tax year, provided that such is not terminated during the tax year. Further the individual must maintain in the tax year a permanent residential property in Cyprus which is either owned or rented by him/her.

For the purpose of calculating the days of stay in Cyprus, the day within and outside the Republic of Cyprus is determined as follows:

• Day of departure from the Republic is considered as a day outside the Republic
• The day of arrival in the Republic is considered as a day within the Republic
• Arrival and departure from the Republic on the same day is considered as a day within the Republic
• Departure and return to the Republic on the same day is counted as a day outside the Republic

Individuals who are not tax residents of Cyprus are taxed on certain income accrued or derived from sources in Cyprus.

Exemptions 

Tax deductions for Individuals

Loans or Other Financial Assistance Provided to Company Directors or Individual Shareholders

Any amount received as a loan or financial assistance by a company’s director, or by a company’s individual shareholder, or by his/her spouse, or by any relative up to a second degree is considered as a monthly benefit equal to 9% p.a. calculated on the received amount. Such benefit is included in the individual’s taxable income subject to income tax.

The amount of tax on the monthly benefit should be withheld from the individual’ monthly salary and paid to the Tax Department on a monthly basis under the PAYE system.

Personal Income Tax Declarations - IR1

Employees

Individuals with gross income of more than €19.500 annually must submit electronically their personal income tax return to the office of the Inland Revenue until 31st of July of the following year.

Self-Employed

Individuals with no obligation to maintain proper books and records and prepare audited financial statements must submit their personal income tax return to the office of the Inland Revenue until 30th September of the following year. Individuals with an obligation to maintain proper books and records and prepare audited financial statements must submit their personal income tax return to the office of the Inland Revenue until 31st of December of the following year (Electronically 31st March, after the following year, ie 15 months).

All Tax Declarations must be submitted electronically with TAXINET system.