Tax obligations chapter 5 cy

National law – CY – Legal system – module 5

Residency for tax income purposes in Cyprus is determined by whether an individual has lived in the country for a minimum of 183 days in the annual year.On 14 July 2017 the Cyprus parliament voted for a Cyprus tax law amendment adding a second test –the “60 day rule” – for the purposes of determining Cyprus tax residency for individuals. As per the said amendment which is effective as from 1January 2017 (i.e. as from tax year 2017 – the tax year in Cyprus being the calendar year) an individual will be considered as a taxresident of Cyprus if the individual satisfies either the current “183 day rule” or the new “60 day rule”for the tax year.

The “60 day rule” applies to individuals who in the relevant tax year:

(i) do not reside in any other single state for a period exceeding 183 days in aggregate, and

(ii) are not tax resident in any other state, and

(iii) reside in Cyprus for at least 60 days, and

(iv) have other defined Cyprus ties.

Individuals who are tax residents in Cyprus are taxed on their worldwide income (i.e. income derived both from Cyprus and abroad) but only need to pay tax if their annual income is more than 19500 Euros. Tax rate is progressive as follows:

To calculate your tax you can use:

According to the law of Cyprus, non-payment of taxes is a criminal liability. Taxes are paid at the end of June of the next year.According to the tax law in Cyprus, the employers are responsible to ensure that all their employees pay tax. All payments made to the employees are transferred after withholding the tax. This way, the taxation of employees’ earnings is regulated.

Tax obligations are different for corporations and individuals residing in Cyprus.Companies are considered as Cyprus tax residents provided that they are managed and controlled in Cyprus. The main determining factor for establishing management and control in Cyprus is to ensure that all board of directors’ meetings take place in Cyprus. Minutes of such meetings should be prepared and maintained at the company’s registered office in Cyprus. A company which is tax resident in Cyprus is taxed on worldwide net income at the rate of 12.5%. In case of corporate tax, it is collected through a self-assessment system. Corporate tax rate has to be paid in two instalments. The first instalment is paid by 31st July while second is paid by 31st December. 4% late payment is to be charged if these instalments are missed. Personal tax requirements are different in comparison to the corporate tax obligations.

Kyriakides, Nicolas, “Civil Procedure Reform In Cyprus: Looking To England And Beyond” (2016) 16 Oxford University Commonwealth Law Journal

Kyriakides, Nicolas, “Civil Procedure Reform In Cyprus: Looking To England And Beyond” (2016) 16 Oxford University Commonwealth Law Journal


SEE ALL Add a note
Add your Comment

Advanced Course Search Widget ©

Setup Menus in Admin Panel