Business is booming in Cyprus, with the continuing surge of ex patriots finding a wealth of fresh opportunities, particularly in services and products related to tourism and property. You can choose to work for a company, set up as self-employed or start up a business.

Visit the Ministry of Finance website www.mof.gov.cy for more information

www.centralbank.gov.cy


Tax brackets in Cyprus
For individuals
Up to €19,500 Nil
€19,501 – €28,000 20%
€28,001 – €36,300 25%
€36,301 and over 30%

For companies - 10%

Self-employed

When setting up as self-employed under your own name, there are no costs involved. Any costs incurred relate to the running of the business, e.g. to register for VAT, register as an employer, obtain a tax identing card number etc.

Company

Setting up a company takes about 6 weeks. The cost varies according to shareholding and the number of names sent for approval, but a good indication is around €800 to €1500 plus VAT which include the lawyer’s fees.

VAT

Any business must be registered when a) the turnover is expected to be €15,390 or more during the 12 preceding months or b) an expected turnover in excess of €15,390 within the next 30 days. Certain goods and services are exempt from VAT. These include: rental income, medical services and insurance and financial services.

Social insurance contributions

For employed persons, the rate is 12,6% (6,3% payable by the employer, 6,3% by the employee. The Company is obligated to pay 2% for the Social Cohesion Fund, 1,2% for the Redundancy Fund and for the Industrial Fund 0,5%.

Self-employed contributions

The total contribution for self-employed persons is 11,6% of insurable earnings.

Financial Benefits and Services

The cost of living in Cyprus is much lower than the UK, and at 70% of the EU average, particularly in relation to housing and utility expenses. Yet there are even wider financial incentives for living here:

- VAT is levied between 5 and 15%.
- The first €19,500 of an individual’s annual income is tax exempt.
- Corporate profits are taxed at 10%.
- There are two parts in calculating the tax on rental income. The first tax is the Defense Tax which is 3% on the 75% of gross rentals. The second tax is that of Income tax which is payable on the 80% of gross rentals. On the 80% of gross rentals you can deduct any interest paid on the loans that were raised to finance the construction or purchase of the property. Further to this an annual depreciation of 3% can be deducted from the 80%. After these two deductions income tax is calculated using the tax brackets.
- There is no inheritance tax.
- Capital Gains Tax is payable at 20% on the profit of the disposal of immovable property. The first €17,100 is tax exempt or the first €34,200 if property is jointly owned by a couple. If the owner can prove that he/she has resided in the property for over 5 years then the amount of €42,750 or €85,500 if the property is jointly owned is exempt.
- Double taxation agreements with over 26 countries, including the UK, afford a wealth of financial benefits.
- UK pensions can be claimed in Cyprus at just 5% tax. An annual exemption of €3420 is granted.
- Retirees are permitted to own a duty free car.

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