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Cyprus – Taxation

Cyprus is a European island country with a favorable tax system for both individuals and companies. The taxation system in Cyprus is relatively simple, with a worldwide income tax system that applies to both residents and non-residents. In this article, we will examine how the taxation system works in Cyprus, double taxation agreements, the main taxes that expats need to be aware of, special tax breaks for expats, how to file a tax return in Cyprus as an expat, and tax exit procedures for anyone leaving Cyprus to move abroad.

The Taxation System in Cyprus

The taxation system in Cyprus is based on a worldwide income tax system. This means that individuals and companies are taxed on their income earned both within and outside the country’s borders. The tax system in Cyprus is progressive, which means that the tax rate increases as income increases.

Personal Income Tax

Personal income tax in Cyprus is based on a progressive tax rate system. The tax rates range from 0% to 35%, depending on the level of income earned. There are also deductions and exemptions available to individuals, which can reduce their taxable income.

Corporate Income Tax

Corporate income tax in Cyprus is also based on a progressive tax rate system. The standard tax rate is 12.5%, which is one of the lowest corporate tax rates in Europe.


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Value Added Tax (VAT)

Cyprus imposes a value-added tax (VAT) of 19% on most goods and services.

Double Taxation Agreements

Cyprus has signed double taxation agreements with more than 60 countries, including the United States, the United Kingdom, and Canada. These agreements aim to avoid double taxation of income earned in one country by a resident of another country. The agreements generally provide rules for determining which country has the right to tax the income and the tax rate that should be applied. The agreements also provide mechanisms for resolving disputes between the two countries.

Main Taxes in Cyprus

As an expat in Cyprus, you will be subject to several taxes. The main taxes that expats need to be aware of include:

Personal Income Tax

As an expat in Cyprus, you will be required to pay personal income tax on your income earned both within and outside the country’s borders. The tax rates range from 0% to 35%, depending on the level of income earned.

Value Added Tax (VAT)

As an expat in Cyprus, you will also be subject to a value-added tax (VAT) of 19% on most goods and services that you purchase.

Special Tax Breaks for Expats

As an expat in Cyprus, there are several special tax breaks that you may be eligible for, including:

Non-Domiciled Status

Cyprus offers a non-domiciled status to foreign residents who meet certain criteria. This status allows individuals to be exempt from paying tax on income earned outside of Cyprus.

Tax Treaty Relief

Cyprus has signed tax treaties with several countries that provide relief from double taxation. If you are a resident of one of these countries, you may be eligible for relief from Cypriot tax on income earned within the country’s borders.

How and when to file a tax return in Cyprus as an expat

As an expat in Cyprus, you will be required to file a tax return if you have income earned both within and outside the country’s borders. The deadline for filing your tax return is typically July 31st of the following year.

To file your tax return, you will need to gather all your income documents, such as payslips and investment statements. You can file your tax return online using the Tax Department’s website, or by paper.

Tax Exit Procedures for Cyprus

If you are leaving Cyprus to move abroad, you must inform the tax authorities of your departure and settle any outstanding taxes before leaving the country. You will need to file a tax return for the year up until your departure date. The tax return will cover your income up until the day you leave Cyprus.

The tax return is used to determine if you owe any taxes before leaving the country. If you have any tax liabilities, you will need to pay them before leaving Cyprus. You may also be required to pay a tax on certain property that you own in the country, such as real estate.

In addition to filing a tax return, you should also inform your financial institutions, such as banks and investment companies, of your departure. This will ensure that they are aware of your new residency status and can adjust any taxes or fees accordingly.

The taxation system in Cyprus is relatively simple, with a worldwide income tax system that applies to both residents and non-residents. As an expat in Cyprus, you will be subject to several taxes, including personal income tax and value-added tax (VAT). However, there are also special tax breaks that you may be eligible for, such as non-domiciled status and tax treaty relief. It is important to understand your tax obligations in Cyprus and to file your tax return on time. If you are leaving Cyprus to move abroad, you must inform the tax authorities and file a tax return to ensure that you have met all your tax obligations before leaving the country.


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