Below you’ll find a comprehensive outline of Cyprus’s individual income tax framework, focusing on the key tax brackets and relevant surcharges as applicable for 2025. This guide addresses the main features of Cyprus’s progressive personal taxation system and highlights what residents and professionals need to know.
Overview of the Individual Income Tax Framework in Cyprus
Cyprus employs a progressive individual income tax system, assessed on worldwide income for tax residents. Income is taxed in euros (€), and the framework specifies several brackets, each applying a higher marginal tax rate as income increases. The figures and thresholds presented below reflect the official structure for the 2025 tax year.
Cyprus Personal Income Tax Brackets (2025)
The income tax system in Cyprus is structured according to progressive income bands. Below is a summary table for the current year:
| Income Bracket (EUR) | Income Bracket (USD) (1 EUR ≈ 1.10 USD) |
Tax Rate (%) |
|---|---|---|
| €0 – €19,500 | $0 – $21,450 | 0% |
| €19,501 – €28,000 | $21,451 – $30,800 | 20% |
| €28,001 – €36,300 | $30,801 – $39,930 | 25% |
| €36,301 – €60,000 | $39,931 – $66,000 | 30% |
| €60,001 and above | $66,001 and above | 35% |
As the table shows, income up to €19,500 ($21,450) is tax-free. Above this, rates increase progressively, reaching a top marginal rate of 35% for income above €60,000 ($66,000). These brackets apply exclusively to individuals who are tax residents in Cyprus, typically determined by physical presence and domicile criteria.
Assessment Basis and Progressive Structure
The taxation is assessed strictly on total income earned by an individual. There is no flat rate—rates rise with increasing income bands. Malta’s model does not apply any tax for low-level incomes, which remains beneficial for residents with moderate earnings.
Special Surtaxes: The Special Defence Contribution (SDC)
In addition to the progressive Personal Income Tax (PIT), certain types of income are subject to a Special Defence Contribution (SDC), but only if received by Cyprus tax residents who are also domiciled in Cyprus. The conditions and rates applicable in 2025 are summarized below:
| Income Type | SDC Rate (%) | Description/Condition |
|---|---|---|
| Dividend income | 17% | Applies to Cyprus tax resident and domiciled individuals |
| Interest income | 17% (or 3% for certain bonds) | Applies to Cyprus tax resident and domiciled individuals (exceptions for certain bonds) |
| Gross rental income | 2.25% | Applies in addition to personal income tax for Cyprus tax resident and domiciled individuals |
It is important to note that these SDC rates are in addition to regular personal income tax, and only apply under the specified residency and domicile criteria.
Key Points on Domicile and Tax Residency
For surtaxes like the SDC, Cyprus distinguishes between tax residency and domicile:
- Tax residency is typically determined by the 183-day rule, although there are alternative routes under Cyprus law for individuals with significant Cyprus-based economic activity.
- Domicile status relates to the individual’s origin or long-term connections, impacting eligibility for SDC.
Missing and Unavailable Tax Data
Current data for minimum or maximum holding periods for income qualifying under these specific brackets or surtaxes is not publicly available. This is standard in Cyprus, as holding periods are generally not a feature of the country’s individual income tax code for earned or investment income.
Pro Tips: Navigating Cyprus Individual Income Tax Efficiently
- Identify your residency and domicile status early—your exposure to both income tax and SDC depends on these criteria. If you’re new to Cyprus, clarify your status annually.
- Time dividend and interest income carefully, as these streams may be subject to an extra 17% SDC if you are both a tax resident and domiciled in Cyprus.
- For rental income, factor the SDC (2.25%) into your calculations in addition to progressive PIT, as this can impact your net returns.
- Track your income by bracket to optimize the use of the €19,500 tax-free band, which is generous by European standards for low and mid-level earners.
- Always consult the main portal of the Cyprus Tax Department for official guidance and compliance announcements: Cyprus Tax Department.
Additional Considerations
The Cyprus tax system in 2025 offers clear, predictable brackets and moderate top-end rates when compared to many other European systems. The presence of the SDC means additional care is required for investment and passive income. No data is available or applied for minimum or maximum holding periods on income to qualify under these brackets or surtaxes; Cyprus focuses assessment on residency and domicile rather than long-term capital holding.
In summary, Cyprus’s personal tax system stands out for its relatively high tax-free threshold and clearly stratified progressive bands. Awareness of the SDC and your domicile status is essential for accurate tax planning and compliance. The pragmatic, data-driven approach of Cyprus’s tax architecture makes it straightforward for residents and international professionals to anticipate their annual obligations and optimize accordingly.