1. Which persons are liable to Income Tax in Cyprus and in respect of what income?
Individual and companies resident in Cyprus are liable to income tax in accordance with the Income Tax Law (Law No. 118(I) of 2002, as amended) in respect of their worldwide income.
An individual is resident in Cyprus, if they reside therein for a period or more which in aggregate exceed 183 days. A company is resident in Cyprus, if its management and control are exercised in Cyprus.
Non- tax residents are liable to tax in respect of Cyprus source income only. However, non-tax residents having a permanent establishment in Cyprus may elect, if it is to their benefit, to be taxed in accordance with the provisions applicable to tax residents. The income liable to income tax includes, inter alia, trade income, income from salaried services, pensions, interest, dividends, royalties, any amounts of trade goodwill, etc.
The Law stipulates for various exemptions, provided certain conditions are satisfied.
2. Which persons are liable to Special Contribution for the Defence in Cyprus and in respect of what type of income?
Special contribution for the defence is imposed in accordance with the Special Contribution for the Defence of the Republic Law (Law No. 117(I) of 2002, as amended) on income from sources in Cyprus, as stipulated below, which is derived by individuals and companies resident in Cyprus.
An individual is resident in Cyprus, if he/she resides therein for a period or more which in aggregate exceed 183 days.
A company is resident in Cyprus, if its management and control are exercised in Cyprus. The income, upon which it is imposed, is restricted to dividends, interest, rents and the taxable income of public corporate bodies.
The Law stipulates for various exemptions, provided certain conditions are satisfied.
3. Which type of income is liable to Capital Gains Tax in Cyprus?
Subject to certain exemptions, capital gains tax is imposed in accordance with the Capital Gains Tax Laws 1980-2002, on capital gains arising after 1/1/1980, from the disposal of immovable property in Cyprus or shares of companies in Cyprus which own immovable property.
4. On what value is Immovable Property Tax in Cyprus imposed?
Immovable property tax is imposed in accordance with the Immovable Property Tax Laws 1980-2004, on the value of immovable property in Cyprus, on the 1/1/1980. This value relates to the value of immovable property which belongs to an individual or a company, on the 1st January each year.
5. What are the current Income Tax rates applicable to individuals and what are the relevant income bands?
The income tax rates applicable to individuals and the relevant income bands are as follows:
· Chargeable income up to CY£10.750 – 0%
· over CY£10.750 and up to CY£15.750 – 20%
· over CY£15.750 and up to CY£20.600 – 25%
· over CY£20.600 – 30%.
Special tax rates apply in certain cases.
6. What is the current Corporation Tax rate applicable to companies?
Companies, other than public corporate bodies, are liable to tax at the rate of 10%. Public corporate bodies are taxed at the rate of 25%.
7. What type of income is liable to Special Contribution for the Defence and what are the current special contributions for the defence rates?
Dividends – 15%, interest (other than interest relating to savings certificates and development bonds of the Government of Cyprus, interest from deposits with the Housing Finance Corporation and interest accruing from provident funds) – 10%, interest relating to savings certificates and development bonds of the Government of Cyprus, interest from deposits with the Housing Finance Corporation and interest accruing from provident funds – 3%, rental income (reduced by 25%) – 3%, taxable income of public corporate bodies – 3%.
8. What is the current Capital Gains Tax rate and what deductions can you claim?
The capital gain, as determined by the Capital Gains Tax Law, is liable to tax at the rate of 20%. Individuals may, subject to certain conditions, claim the following deductions from the applicable taxable gain: if the disposal relates to a private residence – up to CY£50.000, if the disposal is made by a farmer and it relates to gricultural land – up to CY£15.000, any other disposal – up to CY£10.000. These deductions are granted once in the lifetime of the individual, until fully exhausted and if an individual claims a combination of them, the maximum deduction granted cannot exceed CY£50.000.
9. What are the current Immovable Property Tax rates?
· Value up to CY£100.000 – 0%,
· value over CY£100.000 and up to CY£250.000 – 2,5%,
· value over CY£250.000 and up to CY£500.000 – 3,5%
· value over CY£500.000 – 4,0%
10. What is the due date for the submission of the Income Tax Return of an individual who does not submit accounts?
For an employee, the due date is the 30th April, following the tax year to which the Income Tax Return relates. For a self employed individual who does not submit accounts, the due date is the 30th June, following the tax year to which the Income Tax Return relates.
11. What is the due date for the submission of the Income Tax Return of a legal person (company) or a self employed individual having an obligation to submit accounts?
31 of December, following the tax year to which the Income Tax Return relates.
Theodorou Law is a Cyprus law firm with Cyprus lawyers and other legal experts on legal matters involving Cyprus law, EU law and international law. The above should be used as a source of general information only. It is not intended to give a definitive statement of the law and is subject to the disclaimer.
