This article provides information on the taxation system in Cyprus, taking into account the newly adopted changes in 2018, approved in the tax legislation of the island. Fresh information will provide an opportunity to rationally plan the tax activity of the enterprise.
Cyprus enjoys popularity with foreign investors, thanks to comfortable jurisdiction. By the results of the third quarter of 2017, the island increased its GDP by 0.9% relative to the previous quarter. Compared to the same period in 2016, it became large by 3.9%. The third quarter of 2017 was marked by an increase in the indicator of the employed population by 0.7% compared with the last quarter. If you analyze the same period of time in 2016, there is an increase of 3.5%. The experts also noted that the unemployment rate has decreased and ranked 5th among EU countries. 13.1% of the year 2016 decreased by 11% in the 3rd quarter of 2017. Forecasters expect a breakthrough in the economic indicator in 2018 and 2019.
Persons who plan or are already permanently on the island are required to familiarize themselves with information on taxes that they will have to pay to the state treasury. Thus, tax rates and fees, which residents of the island must pay, will be considered first.
Taxes on income of individuals
Nationals of the state are taxpayers from the incomes that were received on the territory of the country and from foreign sources. Accommodation in Cyprus for longer than 183 days automatically makes individuals a tax resident.
At first the tax period of 2017 the taxpayers of the state can be recognized as individuals, on which the “60-day rule” applies. The item is applied to all individuals who for the current tax period have fallen into such criteria:
• have not accepted the citizenship of another state;
• did not stay abroad more than 183 days in total count;
• did not leave Cyprus for at least 60 days;
• have different relationships with the core, such as:
1. Conducting an official business, employment, being a manager of a firm, subordinate to the tax jurisdiction of Cyprus. This category of communication is taken into account when the activity did not stop in the current period.
2. Among other things, physical persons must have residential real estate in the current tax period, without the obligation to be its owner. Rent is allowed.
The days that were conducted within and outside the state by two tests of the criteria “183 days” and “60 days” are calculated by the scheme:
• the day of arrival in the territory is counted in Cyprus;
• The day of departure from Cyprus is considered to be the day of stay outside the state;
• Arrivals and departures made on Day 1 are counted as conducted in the country;
• departure and arrival on the same date is a day that is held outside the state.
Tax rates for 2018 from the income of individuals in Cyprus
The deduction of personal income tax is carried out at the rates shown in the table:
|Annual tax base, euro||Interest rate, (%)|
|up to 19 500,00||0|
|19 501 ,00 – 28 000,00||20|
|28 001, 00 – 36 000,00||25|
|36 301,00 – 60 000,00||30|
|more than 60 000,00||35|
Under Cyprus law, there are some tax deductions from personal income tax.
|Trade union fees||Amount|
|Waste for the past years and the present period (individuals preparing financial reporting for audit, have the opportunity to take into account losses for taxes for the current year and the last 5 years).||Bet completely.|
|Expenses incurred to maintain the proper condition of the building, which is in the legal field of regulation by the Ordinance on the Preservation of Buildings.||Not more than 700.00 Euro;
1100/1200 euro / 1 sq.m. In correlation to the scale of the design.
|Material assistance to charitable organizations that fall into the accepted register (receipts should be presented).||Full accrual.|
|The value of the investment contribution rate (indirect or direct), from the beginning of 2017, is introduced, annually by small and medium-sized businesses of an innovative type.||Does not exceed EUR 150,000.00 / year, but not more than 50% of the revenue part of the taxable amount calculated at the time of this deduction.|
|Contributions from the amount of remuneration for social insurance, pension and reserve funds (up to 10%), medical funds (not more than 1.5%), except for the above: premiums paid for life insurance (not more than 7% of the insurance amount).||Below 1/6 of the income, which is subject to tax deductions|
|Profit from the lease.||20% of gross income.|