Taxes in Cyprus

Written by Luis Minvielle Moderated by Oleksandra Dosii

Luis Minvielle

Luis is a writer with over 5 years of experience in B2B software. Even though he has always worked in tech, a sector he regularly publishes about, his initial incursions into writing were, curiously enough, music essays discussing scenes from different parts of the world—most likely to deal with his unfulfilled ambition of becoming a neo-soul crooner.

Oleksandra Dosii

Oleksandra is a dedicated marketer with a passion for growing HR-tech products. She believes content marketing is about delivering high-quality content that provides value—not just generating leads. Since 2016, Oleksandra has been involved in tech talent relocation.

Last update: September 26, 2025

Next update: Scheduled for February 1, 2026

Cyprus is often billed as a “tax haven” that came into the spotlight after the fall of the Berlin Wall. But that reputation is outdated. Based on recent OECD peer reviews, Cyprus is rated “Largely Compliant” on tax transparency under the Global Forum’s standards for exchange of information. This means Cyprus has the same level of tax transparency as Germany or the United Kingdom. This means the country has done its best to restore its reputation and seriousness, and that’s good for anyone working there.

But workers have more reasons to find Cyprus attractive. In terms of how much you pay off out of your income, Cyprus remains one of the most attractive countries in Europe. On top of that, new residents can get a 50% tax break on income over €55,000 a year and a 20% tax break on income below €8,550 a year.

With income tax rates ranging from 0% to 35% and a wide range of deductions available—particularly for new expats—the system is considered highly favourable, and in some cases, unmatched within the EU. You can compare it, maybe, to taxes in Ireland or perhaps in Portugal.

Who pays taxes in Cyprus?

If you live in Cyprus as a “tax resident,” you’re generally taxed on your worldwide income. Non-residents pay tax only on Cyprus-source income. Cyprus determines residence under either the traditional 183-day rule (spend more than 183 days in the calendar year in Cyprus) or the 60-day rule. This rule has 5 requirements:

1. Don’t reside in any other country for more than 183 days
2. Don’t be a tax resident of another country during the tax period
3. Keep carrying out activities in Cyprus
4. Own a Cyprus residential estate

The Tax Department explains who counts as a resident and what that implies for tax liability. The fastest way to become a Cyprus tax resident is through the Golden Visa program, also known as the permanent residence through investment.

What is the income tax rate in Cyprus?

Cyprus uses a progressive personal income tax scale for individuals. The main 0–35% brackets in force for recent years for yearly salaries are:

• €0 – €19,500: 0%
• €19,501 – €28,000: 20%
• €28,001 – €36,300: 25%
• €36,301 – €60,000: 30%
• Over €60,000: 35%

Note there are special rules for some. Pensioners can choose either a flat rate of 5% on the excess of €3,420 (this sum being exempt), or the normal scale rates detailed above. There are also some expat concessions, like the first employment exemption and tax credits/deductions that alter effective tax, which we’ll get into later.

This is actually a very good arrangement. Keep in mind that the average salary in Cyprus for a month was €2,509 gross in the first quarter of 2025, and that many Cypriots earn a 13th salary.

Based on the tax calculator, the brackets we just mentioned, and some exemptions you’ll learn about in this guide, we can estimate that a net monthly salary in Cyprus is around €2,100. You’re right to think that this is a pretty good deal for workers, because taxes in Cyprus are not as high as those in some other EU countries. If someone made the same amount of money every month in Belgium, their net salary would be about €1,800.

Cyprus tax breaks for expats

In 2022, Cyprus introduced tax breaks for new residents. These are called the “new employment” exemptions, and we’ll discuss them later on in the article. But, as a quick summary, Cyprus rolled out personal income tax benefits for new residents, including a 50% exemption on annual salaries above €55,000 and a 20% break for incomes under €8,550.

Online tax calculator

If you’re moving for work and want to know how much money you’ll actually take home, try estimating your Cyprus tax rate based on your income. You can do this easily with our online tax calculator.

Other Cyprus taxes

There are several other Cyprus tax rates you should have in mind if you’re planning to move to the island.

Social insurance

Employees, employers and self-employed individuals all contribute to the Cyprus Social Insurance scheme. As of recent years, employee and employer contributions are a percentage of gross remuneration subject to statutory caps (the maximum insurable earnings are updated annually). As of 2025, the percentages are 8.8% for employers/employees and 16.6% for self-employed individuals.

National Health Insurance System

Cyprus’s General Health System (GeSY or GHS) is the publicly run national health service established in recent years. Contributions and registration rules are managed through GeSY. According to the most recent data, Cyprus tax rates are 2.65% for employees and pensioners, 2.90% for employers and 4% for self-employed. If you want to know more about the Cyprus health system, visit our Cyprus healthcare page.

Corporate income tax

In Cyprus, the corporate income tax rate is a flat 12.5%, one of the lowest in the European Union. This rate applies to income earned both in Cyprus and abroad, which makes the country especially appealing for international businesses seeking a tax-efficient base of operations.

Property tax

When buying property in Cyprus, several taxes and fees may apply. Stamp duty is charged on the purchase price, but the first €5,000 is exempt; then it's:

• €5,001 to €170,000 → 0.15%
• €170,000+ → 0.2%.

In addition, buyers must pay a property transfer tax to the Land Registry, calculated on the property’s market value:

• Up to €85,000 → 3%
• From €85,001 to €170,000 → 5%
• €170,000+ → 8%

Even so, transfer fees are reduced by 50%, and if VAT has already been paid on the property, no transfer fees are charged. Beyond these, property owners also pay municipal or local service taxes, which cover things like waste collection, sewage, and street lighting, typically ranging between €90 and €300 per year (sometimes up to €500 depending on location and property size).

Finally, when selling a property, a 20% capital gains tax applies to profits from the sale of immovable property or shares in companies holding such property, unless the income is already taxed under the income tax system.

Value Added Tax (VAT)

Cyprus charges VAT on supplies of goods and services. The Cyprus VAT rate depends on the product or service:

• 19% → Standard rate
• 9% → intermediate rate on restaurant, catering services, accommodation, hospitality, and other services.
• 5% → reduced rate on the renovation and repair of a property.

Inheritance and gifts

Cyprus, like Sweden and Austria, doesn’t have an inheritance tax. Besides that, it has no gift tax, wealth tax, or estate duty. This system has stood since 2000 to attract investment and set up a tax-friendly regulatory framework. When someone inherits property or assets in Cyprus, neither the estate nor the beneficiaries pays inheritance tax or stamp duty. This is very different from countries like the UK, where the estate pays tax before distributing assets, or France and Spain, where each beneficiary pays tax individually above a certain allowance.

That said, some costs can still arise. If you inherit real estate in Cyprus and later decide to sell it, you may have to pay capital gains tax (CGT) at a flat rate of 20% on the profit from the sale. Exemptions exist, such as if the property has been your main residence for at least five years. Additionally, beneficiaries may be charged a transfer fee by the Land Registry, based on their relationship to the deceased: 4% for children, 8% for spouses, and 8% for third-degree relatives (such as cousins).

It’s also important to check if inheritance tax applies in another country, as foreign tax rules (like the UK’s) could still apply to assets inherited in Cyprus.

Special Defence Contribution (SDC)

SDC is a special tax on certain passive income received by Cyprus tax-resident and domiciled individuals: typically 17% on dividends and most interest, and 3% on gross rents (with the effective rate after the 25% deduction). Some categories (e.g., interest from government bonds or where total income is below a threshold) enjoy reduced rates or exemptions; also, non-domiciled residents can be exempt from SDC on dividends/interest. The Tax Department publishes SDC rules and rates.

How to reduce your taxes

There are many avenues to reduce Cyprus taxes rates, especially for expats. We’ll list some of the most important ones, but if you want to read up on all the possibilities, check out the official tax page.

Social insurance contributions

Employee contributions to the Social Insurance Fund are fully deductible from taxable income, up to 1/6 of chargeable income.

Donations to approved charities

Donations to registered charitable organisations are 100% deductible, with no set threshold.

Medical fund contributions

Contributions made to approved medical funds are fully deductible, with no threshold.

Rent deduction for individuals

Individuals who rent out property can claim a 20% deduction on gross rental income.

First-employment exemption

Individuals taking up their first employment in Cyprus, with annual remuneration exceeding €55,000, can receive a 50% exemption on employment income for up to 17 years. Moderate earners below €55,000 can claim a 20% exemption or €8,550 (whichever is lower) for up to 7 years. This is stated in the Income Tax (Amendment) (No. 6) Law of 2022.

Tax deduction for investment in innovative SMEs

Investors in qualifying innovative SMEs can deduct up to 50% of their taxable income, capped at €150,000 per year, with any unused amount carried forward for up to five years.

IP box regime

Cyprus offers one of the most competitive Intellectual Property (IP) tax regimes in Europe, fully aligned with the OECD’s “nexus approach.” Under this scheme, 80% of profits from qualifying IP assets (such as patents and copyrighted software) are exempt from tax. This leads to an effective tax rate of just 2.5% on eligible IP income. Because of the IP box regime, Cyprus is highly attractive for tech companies, R&D operations, and licensing structures.

Notional interest deduction (NID)

Cyprus allows companies to deduct a notional interest expense on new equity injections (share capital or premium). The deduction is based on the 10-year government bond yield plus 5%, limited to 80% of taxable profit from the funded assets. This encourages businesses to finance growth through equity rather than debt and applies to both local and foreign-owned companies.

R&D tax deduction

To stimulate innovation, Cyprus grants an enhanced 120% tax deduction on qualifying R&D expenses. This incentive particularly benefits startups, tech and biotech firms, fintech, and AI companies conducting research in Cyprus, significantly reducing their taxable income.

Avoid penalties

Cyprus income tax returns, VAT returns and other filings are administered by the Tax Department; many returns and electronic services are available through TAXISnet and the Tax Department website. Penalties apply for late filing and late payment. For any specific filing deadlines, extension rules and forms, consult the Tax Department’s “Returns/Forms” pages.

Tax treaties with Cyprus

Cyprus maintains over 50 double taxation agreements (DTAs) with many countries to prevent the same income being taxed twice and to allocate taxing rights (Cyprus publishes the full list and texts via the Ministry of Finance / Tax Department).

Talk to a tax professional

Cyprus has plenty of great tax perks for expats, but figuring out a new tax system in another language isn’t always easy, especially one with so many options. Talking to a local tax advisor can help you make the most of everything Cyprus’s tax system has to offer. And considering taxes in Cyprus might be some of the most lenient in the EU, you should take the most advantage of it.