Where an individual is a resident in Cyprus, tax is imposed on income accruing or arising from sources both within and outside the Republic of Cyprus.

If an individual is not a resident of Cyprus, tax is imposed only on the income accruing or arising from sources within Cyprus.
Tax Rates for individuals

Income exempted from tax.

• Gratuity or lump sum received on retirement or pension – The whole amount
• Lump sum repayment from life insurance schemes – The whole amount
• Lump sum from approved provident funds – The whole amount
• Interest income – The whole amount
• Dividend income – The whole amount
• Gains from disposal of securities – The whole amount

Tax dedcutions.

• Interest relating to the acquisition of fixed assets used in business
• Subscriptions to trade unions or professional bodies
• Donations to approved charities (receipts are necessary)

Non-deductible expenses

• Entertainment expenses in excess of 1% of gross income or €17.086, whichever is lower.
• Private motor expenses
• Contributions to Social Cohesion fund

Tax Losses

Losses are carried forward indefinately.

Personal Allowances

• Social insurance contributions, provident fund contributions, life insurance premiums. (Maximum allowance up to 1/6 of the taxable income before these allowances are deducted)

Tax credits for foreign tax paid
Irrespective of the existence of a double tax treaty, any tax paid abroad on income which is subject to income tax will be credited against any income tax payable on such income.