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Taxes for the Self-Employed in Cyprus

Self employed registration Cyprus

* This article was updated to reflect 2023 tax rules. This article is relevant for the tax year ending 31 December 2023.

If you are self-employed in Cyprus, there are 3 main types of taxation which you should be aware of:

  • Social insurance contributions
  • Personal income tax
  • VAT tax

MAIN TYPES OF TAXES FOR THE SELF-EMPLOYED IN CYPRUS

Below is a high-level summary of only the main details you need to know, with regard to these 3 types of taxes:

1. Social Insurance Contributions

  • The social insurance rate for self-employed individuals in Cyprus is 15.6%.
  • However, note that this 15.6% is multiplied by your ‘estimated earnings’, not your actual earnings.
  • Your ‘estimated earnings’ are determined by the tax department annually based on a person’s years of experience, and field of occupation.
  • You are however allowed to file a special application and request to be taxed based on your actual income (typically used by individuals whose actual income is substantially lower than their estimated income).
  • Social insurance is payable every 3 months.
  • GESY (National Health System of Cyprus) is typically considered together with social insurance. Details of the relevant contributions can be found in this link.
  • For more detailed information about Cyprus social insurance contributions, check this link.

2. Personal Income Tax

  • Everyone who has profits in the year in excess of €19.500, is obliged to submit an IR1 (tax return).
  • If your profits are less than €19.500, you have the option (but not the obligation) to submit a tax return, if you so wish.
  • You can get your relevant TIC (Taxpayer Identification Code) by registering with the Ministry of Economy.
  • There are various exceptions/deductions to which you may be entitled to, with regard to income tax.
  • You can find the Cyprus income tax rates here.
  • Income tax is payable in 2 equal instalments:
    1. The first instalment is due in July of the current year (ie it is payable in advance, mid-year, based on estimated profits).
    2. The second instalment is due in December (being actual tax, minus what you already paid provisionally in July).
  • One final thing to keep in mind is that if your income (not profit!) as a self-employed exceeds €70,000 in a year, you have an obligation to submit audited financial statements.

3. VAT Tax

  • You can find our complete VAT guide here.
  • If you have income (not profit) in any 12 consecutive months which exceeds €15.600, you have an obligation to register with the VAT department.
  • VAT registration can also be done voluntarily.
  • VAT is payable every 3 months.
  • VAT rate is 19% in Cyprus.
  • There are reduced rates – 9%, 5% and 0% – for specific types of transactions.
  • You can reclaim VAT on some purchase invoices dated up to 3 years before the registration date.
  • VAT department is under the Ministry of Economy.
  • If you want to read VAT legislation directly, check the tax department’s website here.

You can see more about our tax services for self-employed individuals here.

If you want to use our services, get in touch with CBU today!

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