Articles

Employment Tax

AES Globaltrench takes a holistic approach for providing a spectrum of tax and advisory services that are targeted at the requirements of the public sector. We offer high quality advice that ensures efficient and effective compliance.

Income tax is payable on assessable income less allowable deductions. Assessable income includes income from employment, rent, interest and profits from trade and business or professions. Allowable expenses include mortgage interest, certain subscriptions, social insurance contributions and pension contributions.

 Taxation of employees:

  • An individual is taxed if he is a resident of Cyprus.
  • An individual is considered resident if he spends in Cyprus more than 183 days per fiscal year.
  • In the case of an individual taking up employment in the Republic, who was nonresident prior to his employment, an allowance of 20% of his remuneration to a maximum of EUR 8,543 is given for a period of three years.
  • All Cyprus residents are taxed in Cyprus on their worldwide income.
  • Such income includes:
  • Employment income
  • Profits from a business activity
  • Rentals from immoveable property and royalties
  • Pensions received (pensions from abroad may be taxed at the rate of 5% after deduction of the first EUR 3,417)
  • Non-residents of Cyprus are taxed in Cyprus only on income earned in Cyprus. Such income includes:
  • Employment income (including benefits), in relation to services rendered in Cyprus
  • Profits from a business activity which is carried out through a permanent establishment in Cyprus
  • Rentals from immoveable property situated in Cyprus
  • Pensions in respect of employment exercised in Cyprus, with the exception of pension paid from a fund established by the Government or local authority

Social security:

Employees are required to make social insurance contributions at a rate of 6.8% of their salary (up to EUR 48,048). Self-employed individuals contribute at 12.6%. The contribution is calculated on notional income, which varies according to the trade or profession.

  • Personal tax rates
    €0 - 19,500                 Nil             Nil
    €19,501 - 28,000        20%        €1,700       €1,700
    €28,001 - 36,300        25%        €2,075       €3,775
    Over €36,300             30%

Deductions and allowances:

The most important personal deductions are: donations to approved charities; social insurance fund contributions (and similar contributions paid abroad); life insurance premiums; pension plan contributions; and medical fund contributions.