Individual - DeductionsLast reviewed - 04 January 2023
Charitable contributions to approved charities (with receipts) are deductible.
Also deductible for PIT purposes, subject to an overall maximum deduction of 1/5 of the chargeable income, are the total of life insurance premiums (the deductible annual life insurance premium is restricted to 7% of the insured amount), employee contributions to the social insurance fund, individual pension, provident fund contributions (the deductible pension/provident fund contribution is restricted to 10% of remuneration), employee medical fund contributions (the deductible medical fund contribution is restricted to 1.5% of remuneration), and employee contributions to GHS (see General Health System in the Other taxes section for more information).
Investments in approved innovative enterprises
As of 1 January 2017, amounts invested each year (either directly or, in certain cases, indirectly) in approved innovative small/medium sized enterprises may be claimed as tax deductible for PIT purposes. The deduction is capped at 50% of the taxable income calculated prior to claiming this deduction, subject to a maximum deduction of EUR 150,000 per year. Unused deduction can be carried forward and claimed in the following five years, subject to the caps mentioned.
The deduction is currently available up to 30 June 2024.
For PIT purposes, generally, expenditure wholly and exclusively incurred for the generation of taxable income is deductible against the individual’s income. Such expenditure should be supported by invoices and relevant receipts or other supporting documents.
Research and development (R&D) expenses
As of 20 July 2022, expenditure for scientific research and for R&D (as recognized by international accounting standards) which is incurred by a person (i.e. legal entities and individuals) that:
- i) carries on a business, and
- ii) has the economic ownership of the intangible asset which arises, or it’s possible to arise, from incurring such expenditure,
is deductible for IT Law purposes.
Any such expenditure of capital nature is tax amortised in a reasonable manner over its useful economic life (as per accepted accounting principles) with a maximum period of 20 years.
For any such expenditure incurred during the years 2022, 2023 and 2024, an additional allowance is granted equal to 20% of the expenditure incurred, which:;
- i) cannot be claimed in parallel with the 80% allowance on net profit under the Cyprus nexus Intellectual Property regime (i.e. cannot be claimed in parallel with New Cyprus IP Box), and
- ii) a person may elect, for each tax year, to waive claiming (in whole or in part).
Investments in audiovisual infrastructure and technological equipment
Natural persons investing in audiovisual infrastructure and technological equipment related to the audiovisual industry are entitled to a 20% deduction from their taxable income for the cost of such investment, subject to certain criteria and conditions.
See the Deductions section in the Corporate tax summary for more information.
For PIT purposes, generally, any employment-related expense of the employee (including contributions to trade unions or other professional bodies) is deductible, unless reimbursed by the employer. Travelling expenses between home and work are not deductible.