Social security contributions
As of 1 January 2019, the employees' own contribution to the state-administered social insurance fund is 8.3% of their gross remuneration, with a maximum annual cap on insurable emoluments as of 1 January 2021 of EUR 57,408. The rate of 8.3% applies for both employee and the employer up to 31 December 2023. Thereafter, the rate will increase every five years until it reaches 10.7% as of 1 January 2039.
As of 1 January 2019, the contributions of self-employed persons are 15.6% of their income (14.6% for 2014 through 2018). Thereafter, the rate will increase every five years until it reaches 20.4% as of 1 January 2039. The amount of the contributions is subject to a lower and a maximum limit, depending on the profession or trade of the self-employed person. These limits are set on an annual basis.
General Health System (GHS)
As per General Health System Law of 2001 (89(I)/2001) as amended 2017, a GHS is introduced in Cyprus aimed to provide to the population equal access to a holistic health care system. Patients will have the option to select a health care provider from the private as well as the public health care sector.
Contributions relating to the implementation of the GHS commenced on 1 March 2019 and have increased as of 1 March 2020 as per the table below:
|Ref||Category||Applied on||Phase A (1 March 2019)||Phase B (1 March 2020)|
|(v)||Persons holding office*||Officers’ remuneration||1.70%||2.65%|
|(vi)||Republic of Cyprus or natural/ legal person responsible for the remuneration of persons holding an office||Officers’ remuneration||1.85%||2.90%|
|(vii)||Persons earning rental, interest, dividend, and other income||Rental, interest, dividend income, etc.||1.70%||2.65%|
|(viii)||Republic’s Consolidated Fund||Emoluments/pensions of persons (i), (iii), (iv), and (v)||1.65%||4.70%|
* Relates to holders of public or local authority office or other office, the income out of which does not come within the scope of (i) or (iii) or (iv) or (vii).
GHS contributions are capped at EUR 180,000 annual income.
Capital gains tax (CGT)
CGT applies only to gains relating to Cyprus-situated immovable property when the disposal is not subject to income tax.
Disposal for the purposes of CGT specifically includes sale, exchange, lease, gifting, abandoning use of right, granting of right to purchase, and any sums received upon cancellation of disposals.
CGT at the rate of 20% is imposed on gains arising from the disposal of immovable property situated in Cyprus or the disposal of shares in companies that directly own Cyprus-situated immovable property. CGT is also imposed on disposals of shares in companies that indirectly own immovable property situated in Cyprus where at least 50% of the market value of the said shares derives from Cyprus-situated immovable property. Shares listed on any recognised stock exchange are excluded from CGT.
In the case of disposal of company shares, the gain is calculated exclusively on the basis of the gain relating to Cyprus-situated immovable property. The value of the immovable property will be its market value at the time the shares were disposed of.
The taxable gain is generally calculated as the difference between the disposal proceeds and the original cost of the property plus any improvements as adjusted for inflation up to the date of disposal on the basis of the consumer price index in Cyprus. In the case of property acquired before 1 January 1980, the original cost is deemed to be the value of the property as of 1 January 1980 on the basis of the general valuation conducted by the Land Registry Office under the Immovable Property Law.
Other expenses that relate to the acquisition and disposal of immovable property are also deducted from the gain, subject to certain conditions (e.g. interest costs on related loans, transfer fees, legal expenses).
It is important to note that, subject to conditions, land, as well as land with buildings, acquired at market value (excluding exchanges, donations, and foreclosures) from unrelated parties in the period 16 July 2015 to 31 December 2016 will be exempt from CGT upon their future disposal.
Individuals can deduct the following from the amount of the taxable capital gain:
|Capital gain arising from:||Deduction (EUR)|
|Disposal of private principal residence (subject to certain conditions)||85,430|
|Disposal of agricultural land by a farmer||25,629|
|Any other disposal||17,086|
The above exemptions are lifetime exemptions subject to an overall lifetime maximum of EUR 85,430.
Other exemptions are also available, under relevant conditions, including gifts between spouses, children (including foster children), and third degree relatives, gifts to family companies, gifts to charities, exchange of properties, donations to a political party, etc.
Value-added tax (VAT)
VAT is imposed on the provision of goods and services in Cyprus as well as on the acquisition of goods from the European Union and the importation of goods into Cyprus. Taxable persons charge VAT on their taxable supplies (output tax) and are charged with VAT on goods or services that they received (input tax).
The standard VAT rate in Cyprus is 19%. Two reduced VAT rates, a 9% rate and a 5% rate, apply in Cyprus.
See the Other taxes section in the Corporate tax summary for more information.
Immovable property transfer fees
The fees charged by the Department of Land and Surveys to the acquirer for transfers of Cyprus-situated immovable property are as follows:
Market value (EUR)
|Rate (%)||Fee (EUR)||Accumulated fee (EUR)|
|From 85,001 to 170,000||5||4,250||6,800|
It is important to note that:
- No transfer fees are payable if VAT is applicable upon purchasing the immovable property.
- The above transfer fees are reduced by 50% in case the purchase of immovable property is not subject to VAT.
Certain debt-for-asset swap arrangements may, under certain conditions, be exempted from transfer fees.
In the case of free transfers of property, the transfer fees are calculated on the value of the property as follows (‘value’ in these cases refers to values as of 1 January 2013):
- From parents to children: Nil.
- Between spouses: 0.1%.
- Between third-degree relatives: 0.1%.
- To trustees: EUR 50.
Mortgage registration fees are 1% of the current market value.
Immovable Property Transfer Levy (IPTL)
As of 22 February 2021 a 0,4% levy is imposed on the sale proceeds from all disposals of immovable property which is within the current control of the Republic.
The levy also applies on disposals of shares of a company which is the owner of such immovable property, to the extent that the buyer of the shares assumes control of such company.
Obligation for payment of the levy lies with the seller of the property.
No clarity is currently available on certain issues such as:
- the taxing point (i.e. date of agreement to sell the property, or any other), as there is no provision for interest and penalties;
- basis of calculation of the levy (e.g. remuneration actually received or agreed disposal consideration);
- the payment method and payment recipient, which is yet to be decided;
- application of the Law amendment to indirect disposal of shares;
- potential exemptions from the levy (e.g. reorganisations, debt for asset swaps and listed shares);
- pro-rata calculation of levy on non 100% share disposals.
Immovable property tax (IPT)
IPT has been abolished as of 1 January 2017.