Cyprus

Personal income tax (PIT)

Cyprus PIT is imposed on the worldwide income of individuals who are tax residents in Cyprus. Individuals who are not tax residents of Cyprus are taxed only on certain types of income accrued or derived from sources in Cyprus.

The following table lists the PIT rates and bands currently applicable to individuals:

Special Defence Contribution (SDC)

SDC is imposed only on dividend, interest (most types), and rental income earned by individuals who are both Cyprus tax resident and Cyprus domiciled for the purposes of the SDC.

For dividend (SDC rate of 17%) and interest income (SDC rate of 17%, except for interest income earned from Cyprus government bonds, Cyprus and foreign corporate bonds listed on a recognised stock exchange, or bonds issued by Cyprus state organisations or Cyprus or foreign local authorities listed on a recognised stock exchange, where a rate of 3% applies), SDC applies instead of PIT. For rental income (SDC effective rate of 2.25%), SDC applies in addition to PIT. However, on 13 September 2023, the Cypress Tax Authority (CTA) issued a Circular pursuant of which rental income from self-catering accommodation that is rented out via online platforms will be treated, subject to certain conditions, as business income (therefore subject to PIT and exempt from SDC).

Non-tax residents are exempt from SDC for all their income, whether earned from Cyprus or foreign sources. This exemption also applies to individuals who are Cyprus tax resident but not Cyprus domiciled for the purposes of SDC. Anti-abuse provisions apply.

An individual who does not have a 'Domicile of Origin' in Cyprus (as defined in the Wills and Succession Law) is only considered to be domiciled in Cyprus for SDC purposes when the individual has been a tax resident of Cyprus for a period of at least 17 years out of the last 20 years prior to the tax year in question. 'Domicile of Origin' is acquired at birth and, as a rule, is the same as the domicile of the father at the time of birth, and in exceptional cases of the mother. For those individuals with 'Domicile of Origin' in Cyprus, detailed rules are used to determine the individuals’ domicile status for SDC purposes.