The process of paying income tax in Cyprus is quite simple. Residents and non-residents can pay their taxes online using the e-filing system of the Inland Revenue Department (IRD).
- The first step for residents is to create an account on the e-filing website. This can be accomplished by providing basic personal information such as name, date of birth, contact information, etc. After completing the registration process, residents must log in to their accounts and file their tax returns.
- All relevant information about the taxpayer’s income and expenses must be included in the tax return. It is critical to ensure that all of the information on the tax return is correct and up-to-date. The taxpayer will be able to see the amount of tax due once the tax return is submitted.
- The following step is to make the payment. Payments can be made by credit or debit card or by bank transfer. A 2.5 percent convenience fee will be applied to credit or debit card payments.
- The IRD will send a confirmation email to taxpayers once the payment has been made. This email will include all payment details, such as the date and time of payment, the amount paid, etc. Residents can also choose to have their tax bills mailed to them.
Non-residents who must pay income tax in Cyprus can do so online through the e-filing system. They must, however, first create an account on the e-filing website. The registration procedure is the same as for residents.
- Non-residents must log in to their account and file their tax returns once their registration is complete. All relevant information about the taxpayer’s income and expenses must be included in the tax return. It is critical to ensure that all of the information on the tax return is correct and up-to-date.
- The next step is to make the payment. Payments can be made by credit or debit card or by bank transfer. A 2.5 percent convenience fee will be applied to credit or debit card payments.
The IRD will send a confirmation email to taxpayers once the payment has been made. This email will include all payment details, such as the date and time of payment, the amount paid, etc. Non-residents can also choose to have their tax bills mailed to them.
Who Should File an Income Tax?
If any of the following applies to you, you are required to register for tax purposes:
- A natural person whose total annual gross income is more significant than 19,500 Euros.
- A legally recognized entity (such as a corporation) has its place of registration in the Republic of Cyprus.
If any of the following applies to you, you are required to register for value-added tax (VAT):
- Suppose you are a legal entity registered in the Republic of Cyprus and the taxable transaction value of your goods and services that were carried out over the 12 months before the current period – or which will be carried out within the next 30 days – exceeds or will exceed €15,600. In that case, you are required to register for VAT.
- A natural or legal person who makes acquisitions in the Republic of Cyprus from other countries that are members of the European Union and meets the following criteria: at the end of any one month, during the preceding period of a year, starting from the 1st of January, when the total value of acquisitions, exceeds the threshold of €10,251.61; whenever there are reasonable grounds to believe that the value of investments over the next 30 days will exceed the threshold of €10,251.61
How to Calculate Income Tax in Cyprus
If you are a Cypriot resident, you may have to pay income tax on your earnings. You will pay the amount of tax depending on your taxable income and your tax rate. You can use the following guide to help you calculate and pay your income tax online.
You will need to know your taxable income to calculate your income tax. This is the total amount of money you have earned, minus any deductions or allowances. Your taxable income can be found on your payslip or P60.
Your tax rate will depend on how much taxable income you have. The rates for 2019 are as follows:
- 0-19,000: 10%
- 19,001-28,000: 15%
- 28,001-36,000: 20%
- 36,001 and above: 25%
If you have any deductions or allowances, you will need to subtract these from your taxable income before calculating your tax. Deductions can include things like pension contributions or charitable donations. Budgets can include things like your personal allowance or your marriage allowance.
Once you have your taxable income and tax rate, you can calculate your income tax using the following formula:
Taxable income x tax rate = income tax.
For example, if your taxable income is £20,000 and your tax rate is 15%, your income tax would be £3,000.
Once you have calculated your income tax, you will need to pay it to the Cyprus Tax Department. You can do this online using their website or by calling their customer service number.
If you are self-employed, you will need to file a tax return and pay your income tax by the end of January.
You can find more information about income tax in Cyprus on the Tax Department website.
What is the penalty for late payment of income tax in Cyprus?
If you don’t file your income tax return or pay your tax bill by the deadline, you will be charged a late payment penalty. This is currently set at 10% of the amount due.
So there you have it, everything you need to know about paying income tax online in Cyprus. Just make sure you do it before the deadline to avoid any penalties. And if you’re ever in doubt, contact the Cyprus Tax Department for help.