In order to understand your tax obligations, the first thing to consider is whether you're a tax resident of Cyprus. Tax residency is a way for a country to decide what kind of taxes you must pay there. Think of it as your “home base” for tax purposes. To be considered a tax resident of Cyprus you should meet either the '183-day rule' or the '60-day rule' for the tax year:

To qualify for the 183-day rule, you must stay in Cyprus for at least 183 days in a year. These days do not have to be consecutive. Once you do, you will be considered a tax resident of Cyprus. However, if you spend 183 days in any other country during the year, you will lose your tax residency in Cyprus for that year.

Since 2017, individuals can become tax residents of Cyprus using the 60-day rule. To do so, they must meet all the following conditions:

Keep in mind that if you stop working or conducting business in Cyprus during the year, you will lose your tax residency.

the 60-day rule, you must first obtain a tax residence certificate. To do that, you must fill out form T.D. 126 and submit it to the Tax Department.

For the purpose of calculating the days of residence in the Cyprus:

If you moved to Cyprus to start a business, having your company based and tax-registered in Cyprus doesn't automatically make you a tax resident as an individual. You'll have to meet the requirements for either the '183-day rule' or the '60-day rule' if you want to be a tax resident.

Once you become a tax resident of Cyprus, you'll pay income tax on your income from sources inside and outside Cyprus.

If you're a Cypriot citizen and live here, you don't have to do anything since you're automatically considered a tax resident of Cyprus.

Domicile refers to the country that an individual treats as their home. Non-Cypriots who become tax residents can claim non-domicile status to get more tax benefits.

More specifically, non-domiciled individuals do not have to pay Special Defence Contributions on their dividends, interest and rental income. But, they still have to pay income tax as well as contributions towards the General Healthcare System.

There are two types of domicile:

Domicile of origin: This is the domicile you receive automatically once you are born.

Domicile of choice: This is where you have your permanent home.

If you are a Cypriot living in Cyprus, you are considered a Cypriot-domiciled individual. However, you will not be considered domiciled in Cyprus if you chose to domicile in another country and were not a tax resident of Cyprus for the last 20 years, even if born in Cyprus.

You will also be considered Cypriot-domiciled if you were a tax resident in Cyprus for 17 out of the last 20 years. This means that if you move out of Cyprus for a few years and return, you cannot claim non-domiciled status, regardless of your domicile of origin.

However, you can claim non-domicile status if you meet the following criteria:

non-domicile status, you can apply by completing the questionnaire T.D.38Qa and form T.D.38 and submitting them to your local Tax Department office. Once approved, you will receive a certificate of non-domicile status.

Every person working in Cyprus is required to pay contributions towards Social Insurance and the General Healthcare System (GHS or ΓεΣΥ). Social Insurance is where you get benefits from when you can't work in case of illness, disability, old age, etc. GHS gives you access to medical services, and every permanent resident of Cyprus can use it.

As an employer in Cyprus, you have several obligations regarding social insurance, GHS contributions, and other mandatory contributions for your employees which are calculated based on their salary. As of the 1st January 2024, the minimum monthly wage is €1,000 gross for full-time employees.

First, you need to register with the Employers' Register of the Social Insurance Services:

These payments must be made by the end of the following month for which they are due.

Remember that as an employer, you are also required to create an account in the ERGANI platform, using your Employer Registration Number. Through the platform, you must inform the Social Insurance Services of any new hires, employee termination, and other relevant information.

Particularly, as an employer you should maintain a recruitment register, which includes personal information for each employee (serial number, name, ID card number, social insurance number, date of recruitment and date of commencement of employment).

As an employee in Cyprus, where the majority of the workforce is employed by others, it's important to understand how social insurance and GHS contributions work.

The overall contribution to social insurance is 22.8% of your earnings. However, you don't cover the entire amount yourself. Contributions are divided as follows:

Similarly, GHS contributions are divided between yourself, your employer and the state.

Remember, employee contributions are deducted from your gross salary, not paid out of pocket. This means that, for example, when someone says they will pay you a gross salary of €1500 per month, 8.8% of that amount will be deducted for social insurance and 2.65% for GHS.

If you have two jobs, you will be paying these contributions for both.You don't need to worry about making these payments yourself since your employer will take care of them for you.

If you're self-employed in Cyprus, you are responsible for registering and paying your Social Insurance and GHS contributions yourself.

The overall contribution to social insurance is 21.8% of your earnings, and it is divided between yourself and the state as follows:

Similarly, GHS contributions are divided between yourself and the state.

First, you need to register as self-employed with the Social Insurance Services:

For purposes of calculating the amount of your contributions, the state bases the calculation on your occupation.

You can find a list of self-employment categories and their minimum weekly earnings below.

If you earn less than the minimum amount set by the state, you can apply to have your contributions be based on your actual earnings instead. To do that, fill out and submit form YKA 1-017

to your local Social Insurance District Office.

Remember that you'll have to make these payments yourself every three months.

If you are both an employee and self-employed at the same time, such as having a 9-5 job and a side hustle, you need to pay social insurance for both. Many people mistakenly think they don't have to pay for their side hustle if they already pay social insurance through their main employment, but this is incorrect.

Before starting a side hustle or any new venture, it's best to check with Social Insurance Services about your specific circumstances. Asking ahead of time can help you avoid legal issues in the future. While you can call them or even go there in person, it's better to send your questions via email. Having their written response can be helpful if any misunderstandings arise later on.

Rental income is not subject to Social Insurance contributions. It is however subject to GHS contributions. Regardless of the amount, rental income is subject to GHS at the rate of 2.65% of the gross rental income, and the payment method depends on whether the tenant is an individual or a company. GHS contribution on rental income only applies when the landlord is an individual, if the landlord is a company, they are exempt from paying GHS on rental income.

Where the tenant of a property is an individual, the landlord must file a self-assessment and pay the GHS on the 30th of June for the first half of the year, and 31st of December for the second half of the year. Payments are made through the Tax Portal.

Where the tenant is a company or a partnership, GHS on rental income is withheld at the source at a rate of 2.65% of the gross rental amount. This means that the tenant is responsible for deducting this amount from the gross amount of rent and pay the GHS contribution to the Tax Authorities with Form IR614A on the 30th of June for the first half of the year, and 31st of December for the second half of the year. Once again, payments are made through the Tax Portal.

Dividend income is also subject to GHS at the rate of 2.65%. Companies that pay dividends to their individual shareholders are required to withhold the GHS contribution from the dividends of their shareholders and pay it to the Tax Authorities. Companies must declare these using form TD603 and pay the GHS through the Tax Portal by the end of the month following the month in which the dividends were paid.

Social Insurance contributions are only calculated on an annual income up to €62,868. Any amount you earn over €62,868 will not be considered in these calculations.

Similarly, GHS contributions are capped at an annual income of €180,000 meaning that any amount you earn over €180,000 will not be considered in these calculations. Officers and Pensioners are also subject to a 2.65% contribution rate for the GHS. You can find more information on the GHS here.

Income tax is money that you have to pay to the government based on how much money you earn. If you are a tax resident of Cyprus, you'll pay income tax on your income from sources inside and outside Cyprus. If you're not a tax resident of Cyprus, you'll only pay income tax on certain income you earn within Cyprus.

Income tax in Cyprus is progressive, which means that the more you earn, the more tax you'll have to pay. However, different parts of your income are taxed at different rates.

Remember, your income isn't just your salary from your job. You must include all types of income, with only certain exceptions and deductions we'll discuss below.

Then, after making the applicable deductions and finding your total taxable income you can determine which tax bracket you fall into and how much income tax you need to pay.

However, just because you fall under a specific tax bracket does not mean that you'll pay that percentage on your entire income.

Before making your calculations, you must check if any of your income falls within exempted categories or if any deductions apply. These exemptions and deductions can lower your taxable income and reduce the amount of income tax you must pay.

There are several types of income in Cyprus that are not counted when calculating income tax.

There are also a number of deductions you can claim that can potentially put you in a lower tax bracket or simply reduce the overall amount of tax you must pay.

If you are self-employed/sole-trader then you can also deduct any expenses used entirely for generating income for your business.

You can also claim Wear and Tear allowances for your business. You can see a list of them here.

Keep in mind that if you are a self-employed individual, there are certain expenses that you cannot deduct. You can see a list of them here.

To better understand how income tax is calculated in Cyprus, I'll lay down a practical example using the scenario of having a full-time office job, selling handmade candles as a side hustle, and earning rental income from an apartment with some made up figures.

You can calculate your income tax using our tax calculator.

As an individual, to submit your tax returns and pay your income tax, you have to get a Tax Identification Number. To do that:

From 2020 and onwards, all individuals who have taxable income are generally required to submit personal income tax returns every year. This obligation applies even if, after deductions, you are not liable to pay any income taxes.

However, the Council of Ministers can issue a decree each year that exempts individuals whose gross income does not exceed €19,500 from the obligation to submit a tax return.

In the last few years, the Council has issued such decrees, exempting these individuals. Nonetheless, there is no guarantee that this exemption will be issued every year, so you should be aware of this and check annually whether you must submit tax returns.

The deadline for submitting your tax returns for 2023 has been extended to the 31st of October 2024.

Tax returns are submitted online through TaxisNet.

The deadline is the 31st of July of the following year.

Suppose you are both an employee and self-employed, meaning that you have income from a salary as well as regular income from a self-employed business. In that case, you must complete both an income tax return as an employee as well as an income tax return as a self-employed person.

You can find a detailed guide on how to complete your income tax return here.

Once you have submitted your tax returns, you will then have to pay the applicable taxes, if any.

You can find a detailed guide on how to pay your income tax here .

Employees whose net salary is over €19,500 and are therefore subject to income tax, don't have to pay it themselves.

Instead, there is the PAYE (Pay As You Earn) system in Cyprus, where income taxes owed by employees are paid directly through their employers. At the beginning of each year, employees must complete the form T.D.59A, detailing all earnings and personal allowances, and give it to their employer.

Using the information provided in that form, the employer can calculate your tax obligation.
Each month, the employer will deduct the appropriate amount of tax from your salary and pay it to the Tax Department on your behalf. PAYE payments must be made by the end of the following month for which they are due.

However, this does not mean that you're not required to submit tax returns. Until the 31st of July each year, employees must file their tax returns to confirm they've paid the correct amount of income tax. If more tax is owed, they pay the difference; if they overpaid, they receive a refund.

If you're self-employed and you have income other than salaries, dividends, pensions and interest, such as profits from your sole trader business or rental income, you are required to pay provisional tax, which involves paying your taxes in advance based on your estimated income for the year.

This is also applicable to employees who have income other than their salary from employment, such as rental income. Provisional Tax payment should be made in two equal instalments on the 31st of July and the 31st of December.

In case that, during the year you realise that you have either overestimated or underestimated your income for the year then you can submit a revised provisional tax calculation by the 31st December through the Tax Portal.

However, if your initially declared taxable income was less than 75% of your actual income for the year and you haven't submitted a revised tax calculation by December 31st, you will be liable to pay a 10% fine on the difference between the final tax due and the provisional tax paid.

On the contrary, if you overestimated your taxable income and ended up paying more provisional tax than you owed, you can claim a refund for the excess tax paid.

Self-employed individuals whose annual turnover exceeds €70,000 must prepare audited financial statements. Also the tax returns date of submission is the 31 March of the second year following that tax year.

Due to the lack of crypto specific laws in Cyprus and the EU, there is uncertainty regarding the taxation of cryptocurrency investments and trading in Cyprus, and how such activities are taxed, if at all.

However, based on general principles of taxation in Cyprus as well as communications with Tax Department Officials it is clear that cryptocurrency activities are generally categorised into two types for tax purposes:

If you purchase cryptocurrencies with the intention of holding them as a long term investment (one-off transaction) then you will not be subject to income tax for any gains you make from this investment. However, this is something you should be able to prove and the tax department will assess whether or not your purchase qualifies as a one-off transaction based on several factors.

In case where you are actively trading cryptos then any profits you make will be calculated as part of your income and subject to income tax.

Whether or not the Tax Department considers your activity as trading depends on several factors such as profit seeking motive, number of transactions, interval between purchase and sale and others. So to be considered as actively trading cryptos does not necessarily solely include buying and selling everyday to make a profit off of short-term market fluctuations (day-trading).

It is enough that you make more than one purchase or exchange one coin for another and generally position yourself so that your portfolio grows over time. Since there are no specific laws or guidelines from the tax department in Cyprus that explicitly exempt cryptocurrency trading from income tax, general principles of taxation appear to be applicable.

If you are trading cryptocurrencies as an individual in Cyprus, any profits you gain will be added to your taxable income. These profits will be taxed based on the personal tax rates applicable in Cyprus.

As such, you must declare your annual crypto profits in your tax returns and pay the applicable tax if you're over the threshold. You can read more on income tax here.

And since profits resulting from crypto trading are to be calculated as part of your income, they'll also be subject to Social Insurance and General Healthcare System (GHS) contributions.

Since trading will be regarded as self-employment income, you will have to pay 16.6% of your income for Social Insurance and 4% for GHS. You can read more on Social Insurance and GHS here.

If you're not trading as an individual and have incorporated a company under which you perform all your cryptocurrency trading activities then the company will be taxed on 12.5% of the profits. You can read more on corporate tax here.

As a shareholder, you can receive company profits through dividends, which are exempt from income tax in Cyprus. However, if you are a Cypriot domiciled individual, these dividends are subject to Special Defence Contribution (SDC) at a rate of 17%. You can read more about it here. If you are a non-domiciled individual, you will not be required to pay any SDC on your dividends. You can read more on non-domiciled status here .

The law is more clear on the taxation of foreign exchange. Any profit resulting from exchange rate differences due to currency fluctuations is tax-neutral in Cyprus. This means that gains or losses from changes in exchange rates are not subject to income tax.

This exemption does not apply to profits made from trading currencies. Many people reading information online are confused by this and think that Forex trading is not taxed. This is incorrect.

If you're an active trader and you primarily buy and sell currencies with the aim of making a profit from short-term fluctuations in currency values then your profits will be taxed normally under income tax. The tax rates will be the same as those discussed above, depending on whether you are an individual or a company.

A common misconception is that trading profits are subject to capital gains tax. However, this is not the case.

Capital gains tax is only applicable to profits from the sale of property in Cyprus and the sale of shares of Companies who own property in Cyprus.

So, if you're trading in cryptocurrencies or in foreign exchange, you do not have to worry about capital gains tax. You can read more on capital gains tax here.

Corporate tax is a tax that businesses pay on their profits. It's like income tax for companies. If a company makes money, it has to pay a percentage of that money to the government as tax. Cyprus has one of the lowest Corporate Tax rates in Europe at 12.5% on profits.

The Tax Residency of a company determines where that Company must pay its taxes. There are two ways to show that a company is tax resident of Cyprus:

• The company is managed and controlled from Cyprus

  
  

• A company that has been registered in Cyprus will by default be considered a tax resident of Cyprus provided it is not a tax resident in any other country.

It's important to know if your company is a tax resident of Cyprus since a Cyprus tax resident company is taxed on its income from all sources, both within and outside Cyprus. On the other hand, a non-Cyprus tax resident company is taxed only on its income from sources within Cyprus.

Before calculating corporate income tax, it's important to determine if any of the company's income falls within exempted categories or if any deductions apply. These exemptions and deductions can lower taxable income and reduce the amount of corporate income tax the company must pay.

Since the corporate tax rate is 12.5%, the company will pay this percentage on its profits, not including exempted income and after applicable deductions have been made.

There are several types of corporate income in Cyprus that are not counted when calculating corporate income tax. These exemptions are the same as those applicable to individual income tax, but the following are specifically relevant to companies:

Expenses used entirely for generating income for the business which can be supported by documentation are deductible when calculating a company's taxable income for Corporation Tax. These deductions include the following:

Wear and tear allowances or capital allowances in Cyprus are tax deductions businesses can claim to account for the depreciation of their assets such as buildings, machines or tools. These are calculated as a percentage on the cost of acquisition of the asset.

So, if your business owns any of the assets in the list below, you can claim a deduction every year based on the percentage of allowance.

When a commercial or industrial building is sold, the new owner can continue to claim tax deductions for the building's depreciation based on its original cost, for the remaining years of its usage duration.

The usage duration for tax deduction purposes is 33 years for all buildings, except for industrial buildings and hotels, which have a usage duration of 25 years.

There are however, certain expenses that cannot be deducted from your business's income.

If a business in Cyprus loses money in a given year, it can use that loss to reduce its taxable income for the next five years. This means that if the business makes a profit in any of the next five years, it can subtract the initial loss from that profit to lower the amount of income that is subject to tax.

However, this is not applicable in case there is a change of ownership of the company and the business activities of the company change substantially.

Additionally, if two companies are part of the same group (one owns at least 75% of the other or they are both 75% owned by a third company), one company's losses can offset the other's profits to reduce taxes.

Another situation when someone can carry forward their losses in Cyprus is in case of a partnership or a sole trader transferring their business to a company. When this happens, the losses of the partnership/sole trader can be carried forward into the new company, reducing future taxable profits.

Every Company in Cyprus is required to register with the Tax Department and obtain a Tax Identification Number (TIN) within 60 days from the date of its incorporation. The process is the same as registering as an individual:

All companies in Cyprus are required to submit Tax Returns regardless of their income.

The submission deadline for tax returns for a given year is the 31st of March of the second year following that tax year.

The submission of your company's tax returns is made online through TaxisNet.

Companies in Cyprus have to pay provisional tax on each year's taxable profit in two equal instalments on the 31st of July and the 31st of December. Provisional taxes are essentially an early payment of your company's taxes based on a self-estimation of the profits of your company in the coming year.

If at any point before the 31st of December you realise that you have either overestimated or underestimated your company's profits for the year then you can submit a revised provisional tax calculation by the 31st of December through the Tax Portal of the Tax Department and adjust the payment of the provisional tax accordingly.

After the year ends and you've calculated your actual profits and realise that you actually made more profit than estimated then you must make an additional payment of the remaining tax due by August 1 of the following year.

However, if your initially declared profit was less than 75% of your actual profit for the year and you haven't submitted a revised tax calculation by December 31st, your company will be liable to pay a 10% fine on the difference between the final tax due and the provisional tax paid.

On the contrary, if you overestimated your taxable income and ended up paying more provisional tax than you owed, you can claim a refund for the excess tax paid.

Cypriot Law requires that an independent registered auditor in Cyprus audits the financial statements of your company. However, if you're a small business, you might be exempt from undergoing a statutory audit.

Specifically, if your company's net annual turnover does not exceed €200,000 and the total value of its gross assets does not exceed €500,000, then you can opt for a review by an auditor instead of a full statutory audit, which can save you costs.

Tax residents of Cyprus that are also domiciled in Cyprus that receive income from dividends, interest and rents are required to pay the Special Defence Contribution (SDC). In essence, the SDC is a tax designed to raise money for the national defence of Cyprus.

Non-domiciled individuals are exempt from SDC. You can read more on non-domicile status here.

Although dividends are exempt from income tax, they are not tax free. There is a 17% SDC tax on profits distributed by companies to their shareholders. However, different conditions apply depending on whether the shareholder is an individual or a company.

Individuals who are shareholders in a Cyprus company must pay the 17% SDC tax on the dividends they receive. This is also applicable if the dividends received are coming from abroad.

If a company in Cyprus receives dividends from another company in Cyprus, it doesn't have to pay the 17% SDC tax on these dividends. However, this exemption applies only if the dividends are distributed within 4 years from the end of the year the profits were earned. After 4 years, the 17% SDC tax applies.

This exemption to payment of the SDC on dividends received by companies is also applicable to dividends received by a company abroad. This means that a company in Cyprus that is a shareholder in a foreign company, generally won't be required to pay the SDC on the dividends received.

However, the exemption does not apply if the following conditions are met:

• The foreign company earns more than 50% of its income from investments (like stocks, bonds, etc.), and

• The foreign company pays significantly less tax on its income compared to what the Cypriot company would pay in Cyprus.

Keep in mind that if a company gives a company asset (like a property) to a shareholder or their close family for free or at below market price, it's still considered as a dividend and is subject to the SDC.

An important aspect of the SDC to have in mind is that when a company in Cyprus makes a profit, it is assumed that it has distributed 70% of the profits as dividends to its shareholders within two years from the tax year which the profits arise from, which means that the shareholders of the company will be taxed on those “deemed dividends” even if they haven't actually received any money.

The company is then responsible to pay the SDC on those “deemed dividends” on behalf of the shareholders and can then charge it on the shareholders.

Companies that pay dividends to their individual shareholders are required to withhold the SDC from the dividends of their shareholders and pay it to the Tax Authorities. Companies must declare these using form TD603 and pay the SDC through the Tax Portal by the end of the month following the month in which the dividends were paid.

Companies are required to submit the Declaration of Deemed Dividend Distribution (TD623) by the 31st January of the third year after the tax year the profits relate to.

Alongside paying SDC on deemed dividends, companies must also pay GHS on these deemed dividends on the same date. Payments are made through the Tax Portal.

Interest is the return on investment when money is saved or invested. If you live in Cyprus and earn interest (with some exceptions), you'll be taxed 17% on that interest.

However, interest from everyday business activities is not subject to SDC. What this means is that when a business such as a bank earns or pays interest as part of its everyday activities, that interest is considered normal business interest and the bank is not required to pay the SDC on that interest.

Additionally, if your total annual income (including interest) is €12,000 or less, you can get a refund for any SDC that you paid (or was withheld from your income) over 3%.

SDC on interest must be withheld and paid to the Tax Authorities using form TD602 through the Tax Portal by the end of the month following the month in which the interest was paid.

In addition to rental income being subject to income tax, it is also subject to the SDC. Specifically, the law imposes a 3% tax on 75% of the gross rental income.

Regardless of the amount, rental income is subject to SDC. The method in which payment of the SDC is made is solely dependent on whether the tenant of your property is an individual or a company.

If your tenant is an individual, you must do the following as the landlord:

If the tenant is a company or partnership, they must withhold SDC at a rate of 3% on 75% of the rent from the gross rental amount. This means that the tenant is responsible for deducting this amount from the gross amount of rent and pay the SDC to the Tax Authorities. To do so, they must:

Value Added Tax (VAT) is a special tax imposed on all goods and services (with some exceptions). Every time you buy something, you also pay VAT even if you don't realise it.

Most of the time, VAT is included in the price and the person who sold you that good or service is responsible for paying that VAT to the government.

The standard rate of VAT applies to the sale of all goods and services in Cyprus, unless they fall under reduced rate or exempt categories.

Renting property, like an apartment, is generally exempt from VAT.

However, there are circumstances when renting property is subject to VAT, including:

Purchasing property, like a house or an apartment, is also generally exempt from VAT.

However, there are circumstances when purchasing property is subject to VAT, including:

Essentially, if you are purchasing a previously owned property, such as a used house where people have already lived, you will not have to pay VAT on the transaction. However, the transaction will be subject to Land Registry Transfer fees, which you can read more about here.

If the property is newly built, then the standard rate of 19% VAT applies.

However, if you plan to use the property as your primary and permanent residence, you may be eligible for a reduced VAT rate of 5%.

This reduced rate applies on the first 130 square meters of the property provided that:

1. The property's value does not exceed €350,000.
2. The total value of the property does not exceed €475,000.
3. The total size of the property is not larger than 190 square meters.

Every business, whether that be a company or an individual, has to register for VAT and obtain a VAT number if they meet one of the following conditions:

• Their turnover subject to VAT exceeded €15,600 in the last 12 months

• They expect to exceed €15,600 within the next 30 days

• They have been providing services to taxable persons in other EU countries

• They bought goods worth more than €10,251.61 from other EU countries in the year starting from the 1st of January or they expect to exceed that threshold in the next 30 days

• They are not established in Cyprus but are engaging in taxable transactions with individuals in Cyprus or expect to do so in the next 30 days

If you meet any of the above conditions, you need to register to obtain your VAT number

After you have obtained your VAT number, you will be required to submit your VAT returns online through the TFA Taxpayer Portal every quarter (three-month period) even if no transactions took place during that time.

After submitting your VAT returns, you must pay any VAT owed by the 10th day of the second month following the end of that reporting period.

In short, businesses can claim a VAT Refund when they pay more VAT on their business expenses (input) than VAT they receive from selling their goods and services (output).

In order to understand how VAT refunds work, you must first understand the concepts of input VAT and output VAT.

Input VAT is the amount of VAT that a business pays on the goods and services it purchases as part of its business operations.

Output VAT is the amount of VAT that a business charges on the goods and services it sells to its customers.

If your input VAT is more than your output VAT, you can choose to carry that surplus forward so that you can offset future VAT liabilities. Alternatively, you can claim to have that amount refunded to you from the Tax Department.

Claims for VAT refunds are made through the TFA Taxpayer Portal.

Additionally, you must also complete form T.D.2008 and submit it to your local Tax Department office along with an IBAN certificate so the refund can be made into your bank account.

Keep in mind that you can only claim a refund within 6 years from the date the surplus was created. Also, the Tax Department can suspend your VAT refunds if you have not submitted income tax returns, until you have done so.

VIES is the VAT Information Exchange System is a search engine used to validate VAT numbers of businesses registered in Member States of the European Union and you can find it in the website of the European Commision.

When a business in one EU country sells goods or services to a business in another EU country, the transaction is referred to as an intra-community transaction.

Cypriot businesses that carry out intra-community transactions must register as such with the Tax Department.

There is no threshold for transactions in order to register to VIES. As soon as you start selling goods or services to other EU countries you must register.

Once registered, you must submit a Recapitulative Statement, which is a report of your sales in the EU, through the TFA Taxpayer Portal every month.

Particularly, you must submit the Recapitulative Statement by the 15th day of the month following the month you're reporting for.

Aside from VAT returns, every business that imports goods to Cyprus from other EU countries or exports goods from Cyprus to other EU countries may also need to submit Intrastat reports.

Particularly, the government sets the threshold for submitting Intrastat each year. For 2024, businesses that trade within the EU are required to submit Intrastat only if:

1. Their imports from EU countries exceed €320,000
   
2. Their exports to EU countries exceed €75,000

If you exceed the thresholds, you must register with the Tax Department to gain access to the Intrastat system.

Once you're registered, you must submit Intrastat returns every month electronically through TaxisNet. Intrastat returns must include information about your business' exports/imports.

Particularly, you must submit your Intrastat returns by the 10th day of the month following the month you're reporting for.

Capital gains tax in Cyprus at the rate of 20% is only applicable to profits from the sale of property in Cyprus. This also applies to the sale of shares of a company that owns property in Cyprus or indirectly owns property in Cyprus and 50% of its market value is from immovable property.

However, shares listed on any recognised stock exchange are excluded from capital gains tax.

Since capital gains tax is only applicable on profit, the first step is to find the taxable profit from the sale of a property.

Simply put, the taxable profit is the difference between the price the property is being sold today versus the price the property was originally purchased for, plus any additional costs such as renovation costs, legal fees etc, plus any of the lifetime allowances if requirements are met.

Sale Price - (Purchase Price + Additional Costs + Lifetime Allowance) = Taxable Profit

Taxable Profit x 20% = Capital Gains Tax

To find the difference between the price a property is being sold for today versus the price it was originally purchased for, you can't simply deduct the purchase price from the current sale price.

If you bought a house for €100,000 in 1985, that amount of money doesn't have the same value today because of inflation.

Inflation makes money lose its purchasing power over time, so €100,000 in 1985 could buy more than €100,000 can today. To find out how much that house would cost in today's money, we must first adjust for inflation, showing the true value in today's terms.

You can find a table of Inflation Rates released and updated by the Tax Department here.

Keep in mind that if you bought your property before the 1st of January 1980, the original cost of that property is considered to be its value as of the 1st of January 1980. That value is based on the valuation of the Land Registry.

To find the the inflation-adjusted purchase price you must:

1. Divide the Inflation Rate in the year of sale by the Inflation Rate in the year of purchase. This gives us the inflation adjustment number.

2. Then, multiply the original purchase price by the inflation adjustment number. This gives you the adjusted purchase price.

   
   

Once you have found the purchase price adjusted for inflation, you should then add to the deductible amount any additional expenses that you incurred in relation to the property that were made exclusively for making a profit, provided that these expenses were not deducted from your then income tax returns.

This can include renovations that increase the value of a house and any expenses related to the sale of a house such as transfer fees, real estate commissions, legal fees, interest on loans and others.

Again, you can adjust these expenses to account for inflation to find the inflation-adjusted expenses:

1. Divide the Inflation Rate in the year of sale by the Inflation Rate in the year the expenses were made. This gives us the inflation adjustment number.

2. Then, multiply the original cost of expenses by the inflation adjustment number. This gives you the adjusted expenses.

   
   

Finally, individuals are entitled to lifetime allowances which can also be added to the deductible amount before calculating the amount subject to Capital Gains Tax.

Particularly, there are three types of allowances which an individual can claim:

Although it is possible to combine the above allowances, an individual cannot exceed the combined amount of €85,430. Additionally, you can only claim it once in your life.

Using all variables, we can accurately calculate the capital gains tax payable upon the sale of a property.

There are also a number of instances where the disposal of a property is not subject to Capital Gains Tax.

When selling or buying a Property in Cyprus, several taxes and fees are applicable based on the transaction's price and the property's status.

These are paid between the seller and the buyer as follows:

You can read more on Capital Gains Tax here, and more on VAT here. This article will cover the remaining property related taxes and fees.

When transferring a property in Cyprus, the Land Registry imposes a transfer fee which is paid by the person receiving the transfer.

The transfer fee rates are progressive which means that different portions of the value of the property will be taxed at different rates.

Therefore, the higher the value of the property, the higher the transfer fee. The value of the property is estimated by the Land Registry.

In cases where the property transaction in question is not subject to VAT, the law provides for a 50% reduction of the transfer fee.

Different rates are applicable in cases where the transfer occurs between family members. Particularly:

There are also a number of situations where the transaction is exempt from transfer fees.

In 2021, the Government introduced a 0,4% levy on the proceeds arising from all immovable property disposals.

The aim of this levy is to fund compensation efforts for individuals affected by the Turkish invasion and occupation with the aim of restoring their pre-war financial condition.

Particularly, the levy is applied as follows:

• In the case of transferring real estate through a sale, where the property's value has been determined by the Land Registry, the seller must pay a fee equal to 0.4% of the sale price of the property.

• When shares of a company not listed on any recognized stock exchange are sold, and the company directly or indirectly owns real estate for which Land Registry has determined a value, the seller must pay a fee equal to 0.40% of the last assessed value of the real estate, proportional to the shares being transferred.

Legal documents that are related to transactions involving property are subject to stamp duty. In essence stamp duty provides legal validity to a document ensuring that its enforceable and recognised by authorities.

Stamp Duty is calculated on the value of the Contract/Agreement as follows:

The maximum amount of stamp duty that may be imposed on a document is capped at €20,000.

Stamp Duty is also applicable on other types of documents as well:

As of 2017, immovable property tax has been abolished.

As of 2000, inheritance tax has been abolished.

However, the executor/administrator of a deceased person's estate is required to submit a statement of the deceased's assets and liabilities to the tax authorities within six months of the date of death.