calculate-income-tax

How to Calculate Income Tax in Cyprus?

In Cyprus, income tax rates are attractive for both EU and non-EU nationals. Tax residents in Cyprus are taxed based on chargeable income from Cyprus and foreign sources. However, individuals who are not tax residents are only taxed on certain income from Cyprus sources. If you plan on working or moving to Cyprus in the future, you might be wondering how to calculate tax in Cyprus.

There are several ways to calculate income tax, and one of the most convenient options available for everyone is using an income tax calculator for tax in Cyprus. Income tax calculators allow you to choose the number of payroll payments for the year. Some options include 12 months plus 1, 13 months with a bonus, and 14 months with extra payments. You may choose an applicable payroll to produce the annual income tax you need to pay. 

How to Calculate Income Tax in Cyprus

Who is Liable to Pay Tax in Cyprus?

Individual tax residents present in Cyprus for a total period exceeding 183 days of the tax year are liable to pay taxes following the “183 days rule.”

You may also be considered a tax resident of the country if you meet the “60 days rule” and have satisfied the following conditions:

  • You did not reside in any other nations for more than 183 days.
  • You are not a tax resident of any other nation.
  • You have lived in Cyprus for at least 60 days.
  • You maintain a residential property in Cyprus that you own or rent within the tax year.
  • You have established ties in Cyprus, such as a business, employment, or holding office in a company tax resident in Cyprus. 

For the 183 days rule and the 60 days rule, days in or out of Cyprus will be calculated in this manner: 

  • The date of departure from Cyprus will be counted as the start of residence outside Cyprus
  • The date of arrival in Cyprus will be counted as the start of residence in Cyprus
  • Arrival and departure on the same date in Cyprus will be counted as a day of residence.
  • Departure and arrival in Cyprus on the same date will be counted as a day of residence outside the country. 

Cyprus tax residents are liable to pay taxes for all their worldwide income, and non-tax residents will only pay taxes for specific income earned from Cyprus sources. This is in accordance with double taxation relief and double tax treaties.  

How Can I Pay Income Taxes to the Tax Department?

There are two ways to collect income taxes in Cyprus through the tax department. For some, taxes are deducted from their income before being given out as salaries or wages. Others pay their taxes directly to the Tax Department. For instance, employers deduct employment income taxes from the salaries based on the Pay as You Earn system, and an employee will receive the net amount of his salary. 

How Much Income Tax Do You Need to Pay in Cyprus?

Employees in Cyprus may pay income taxes and social insurance whenever they receive their wages from Cyprus employment. The tax rate and amount that one needs to pay will depend on the earnings, allowable deductions, tax exemptions, and the applicable rates. 

What are the Types of Online Calculator for Cyprus Tax?

There are several types of online calculators to check your taxes in Cyprus. Let’s see which one will you need among the following: 

Calculator for Cyprus Tax – these are designed to provide easy and quick calculations for your Cyprus tax. Generally, these tools conform with the requirements of Cyprus tax computations. Still, the final calculations may be affected by other factors. 

Income Tax Calculators – these tools give you the net salary, income tax, and GESY contribution annually. It is also quick and easy to use, and you need to input your gross salaries and the specific tax year to get an automatic calculation of your income tax. 

Dividend Tax Calculators – these calculators give the GESY and defense contribution quickly and effortlessly. Your tax residence, domicile country, and other contributions will be considered to calculate your dividend tax accurately. The details you need for this are your gross dividends and the distribution period.  

Rental Income Tax Calculator – With this tool, you can easily get the estimated tax on your property income. It will consider your GESY contribution, defense payments, and additional income taxes. 

Payroll Cost Online Calculator – these tools give accurate calculations of your payroll costs. It will account for your GESY contributions and social insurance in seconds. You need to input your gross annual salary and choose the tax year to calculate it automatically.

Summary

Discussions and calculations of tax in Cyprus can be an overwhelming experience for those unfamiliar with how it works. There are several things to consider for each type of tax you need to calculate, and you need to input the right details for you to get accurate results. If you want hassle-free tax calculations in Cyprus, it is best to work with Cypriot tax and business experts.