Quick Answer

Cyprus income tax uses a progressive scale: 0% on the first EUR 22,000, 20% from EUR 22,001-32,000, 25% from EUR 32,001-42,000, 30% from EUR 42,001-72,000, and 35% above EUR 72,000. Non-Dom residents pay 0% on dividends and interest (only 2.65% GHS). The 50% exemption applies to employment income above EUR 55,000 for the first 10 years.

Key Facts 2026

EUR 0-22,0000%
EUR 22,001-32,00020%
EUR 32,001-42,00025%
EUR 42,001-72,00030%
Above EUR 72,00035%
Non-Dom: dividendsNot included in taxable income (0%)
Non-Dom: GHS on dividends2.65% (separate from income tax)
Foreign employment income exemption50% for income > EUR 100,000 (first 5 years)
Tax year1 January to 31 December

Personal Income Tax in Cyprus: Complete 2026 Guide

Cyprus updated its personal income tax bands in 2026. Tax-free threshold is now €22,000. Here is every rate, exemption, and deduction explained.

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Cyprus Personal Income Tax 2026: Rates [Calculator] - infographic with key data and step-by-step breakdown
Cyprus Personal Income Tax 2026: Rates [Calculator] - data infographic for expats and entrepreneurs relocating to Cyprus

How to Calculate Your Personal Income Tax in Cyprus

Cyprus uses a progressive tax system. Each rate applies only to the income that falls within its bracket, not to your total income. The calculation follows three steps.

Step 1: Identify your gross taxable income

Include all employment salaries, director fees, rental income, and trading income. Exclude dividend income if you hold Non-Dom status (only 2.65% GHS applies to dividends for Non-Dom residents, zero income tax).

Step 2: Apply the 2026 tax brackets progressively

EUR 0 to EUR 22,000: 0% (tax-free threshold, raised from EUR 19,500 in the 2026 reform).

EUR 22,001 to EUR 32,000: 20% on this EUR 10,000 band = up to EUR 2,000.

EUR 32,001 to EUR 42,000: 25% on this EUR 10,000 band = up to EUR 2,500.

EUR 42,001 to EUR 72,000: 30% on this EUR 30,000 band = up to EUR 9,000.

Above EUR 72,000: 35% on income above this threshold.

Step 3: Add GESY (GHS health contribution)

GESY is separate from income tax and applies to all Cyprus tax residents. Employees pay 2.65% on gross employment income. Self-employed pay 4.70%. There is no exemption for Non-Dom status - GESY applies to both salary and dividend income.

Worked example: EUR 40,000 gross salary (employee)

First EUR 22,000: 0% income tax = EUR 0.

EUR 22,001 to EUR 32,000 (EUR 10,000 band): 20% = EUR 2,000.

EUR 32,001 to EUR 40,000 (EUR 8,000 band): 25% = EUR 2,000.

Total income tax: EUR 4,000. Effective income tax rate: 10%.

GESY (2.65% on EUR 40,000): EUR 1,060.

Net take-home: EUR 34,940 per year (EUR 2,912 per month). For an exact figure using your salary, use the Cyprus Salary Calculator.

Quick reference: income tax by salary level (2026)

EUR 22,000: EUR 0 income tax (0% effective rate).

EUR 30,000: EUR 1,600 income tax (5.3% effective rate).

EUR 40,000: EUR 4,000 income tax (10% effective rate).

EUR 50,000: EUR 6,900 income tax (13.8% effective rate).

EUR 60,000: EUR 9,900 income tax (16.5% effective rate).

EUR 80,000: EUR 16,300 income tax (20.4% effective rate).

All figures above are for employment income with no 50% salary exemption applied and exclude GESY.

Frequently Asked Questions

What is the income tax rate in Cyprus for 2026?
Cyprus uses progressive rates: 0% up to €22,000, 20% on €22,001–€32,000, 25% on €32,001–€42,000, 30% on €42,001–€72,000, and 35% above €72,000. The 2026 reform raised the tax-free threshold from €19,500 to €22,000.
Do I pay income tax on dividends in Cyprus?
No. Dividends are not subject to personal income tax in Cyprus. They fall under the Special Defence Contribution (SDC) system. Non-Dom residents pay 0% SDC on dividends. Domiciled residents pay 5% SDC. All residents pay 2.65% GHS contribution on dividends, capped at €4,770 per year.
What is the personal income tax free threshold in Cyprus?
The tax-free threshold is €22,000 per year as of January 2026. This applies to all Cyprus tax residents regardless of nationality or domicile status.
How are freelancers taxed on income in Cyprus?
Freelancers and self-employed individuals are taxed on net profits using the same progressive income tax bands as employees: 0% up to €22,000, up to 35% above €72,000. They also pay 16.6% social insurance on deemed income and GHS contributions.
What is the 50% income tax exemption in Cyprus?
New Cyprus tax residents employed in Cyprus who earn more than €55,000 per year can claim a 50% exemption on employment income for 10 years. The threshold was reduced from €100,000 to €55,000 in the 2026 reform.
Is Cyprus income tax based on worldwide income?
Yes. Cyprus tax residents are taxed on worldwide income. However, Non-Dom residents are exempt from SDC on worldwide dividends and interest. Double tax treaty relief is available to prevent double taxation on the same income.
Do I need to file a tax return in Cyprus?
Yes if your annual income exceeds €19,500 (the threshold for filing obligation). Returns are filed via TAXISnet by July 31 for electronic submissions. Provisional tax payments are made in two instalments during the year.
Is Cyprus an income tax-free country?

Cyprus is not income tax-free, but Non-Dom residents pay only 2.65% effective tax on dividend income through the GHS healthcare contribution. Residents face progressive income tax from 0% on the first €19,500 annually to 35% above €60,000. Most expats and entrepreneurs structure income as company dividends rather than salary to minimize tax. Dividend income for Non-Dom residents is fully exempt from income tax, making the effective rate approximately 2.65% rather than zero.

So: 0% income tax on dividends for Non-Dom residents. But 2.65% GHS still applies. And the company that pays those dividends pays 15% corporate tax on its profits first. The combined effective rate (corporate + GHS on dividends) is approximately 17%, not 0%. Cyprus is not a zero-tax jurisdiction, but it is one of the lowest in Europe for entrepreneur and investor income.

How much income tax do I pay in Cyprus if I earn €25,000?
On a €25,000 salary, you pay income tax only on the €3,000 above the tax-free threshold of €22,000. At the 20% rate applicable to the €22,001–€32,000 band, that is €600 in income tax for the year — an effective rate of 2.4% on total income. You also pay GHS (healthcare) contributions of 2.65% on the full amount (€662.50/year) and social insurance of 8.8% on the capped amount. Total tax burden is well under 15% of gross income, significantly below most EU countries for the same salary.

Related Guides

Sources

Cyprus Tax Department - Income Tax Law (updated 2026). Tax rates confirmed per the 2026 Cyprus Tax Reform Package. Updated: April 2026.

Use our free Cyprus Salary Calculator to estimate your exact take-home pay after income tax and GESY for any gross salary. For freelancers and sole traders, the Cyprus Self-Employment Tax Calculator shows your net income using the 4.70% GESY rate and the same progressive income tax brackets.

Frequently Asked Questions

How do I calculate my Cyprus income tax for 2026?

Cyprus income tax uses progressive bands on taxable income after deductions. The 2026 bands are: 0% on the first €22,000; 20% on €22,001 to €32,000; 25% on €32,001 to €42,000; 30% on €42,001 to €72,000; 35% above €72,000.

Example: with a taxable salary of €50,000, you pay €0 on the first €22,000, plus €2,000 (20% of €10,000 between €22k-€32k), plus €2,000 (25% of €8,000 between €32k-€42k), totalling €4,000 in income tax — an effective rate of 8% on total income. Key deductions include the 50% salary exemption for new residents earning over €55,000 (valid for 17 years), social insurance contributions, and life insurance premiums.

What is the Cyprus income tax filing deadline for 2026?

For employed individuals (IR1 form): the deadline is 31 July of the following year, so the 2025 tax year return is due 31 July 2026. For self-employed individuals with turnover above EUR 70,000 (IR1A form): 31 March of the following year if audited accounts are required. Electronic filing via TaxisNet is mandatory.

Payment of tax due accompanies the filing. Interest at 1.75% per month applies to late payment. Provisional tax for the current year is paid in two equal instalments: 31 July and 31 December of the current year.

What personal income tax exemptions are available in Cyprus?
Cyprus offers two major income tax exemptions for new residents. First, the 50% salary exemption: employees who are new Cyprus tax residents earning more than €55,000 per year can claim a 50% exemption on employment income for up to 17 years. Second, Non-Dom residents are fully exempt from income tax on all foreign passive income — dividends, interest, and rental income carry 0% income tax (only 2.65% GHS applies). The €22,000 tax-free threshold applies to all residents. Foreign pension income may also qualify for relief under double tax treaties.
How is personal income tax calculated for foreign employees in Cyprus?
Foreign employees in Cyprus pay progressive income tax on employment income: 0% on the first €22,000, 20% on €22,001–€32,000, 25% on €32,001–€42,000, 30% on €42,001–€72,000, and 35% above €72,000. New residents earning over €55,000 per year qualify for a 50% salary exemption for up to 17 years, significantly reducing effective income tax. Employers contribute 8.8% social insurance and 2.9% GHS on top of gross salary. Many internationally mobile employees structure income as company dividends under Non-Dom status instead — dividends carry 0% income tax + 2.65% GHS only.
What are the income tax benefits of Cyprus tax residency for remote workers?
Remote workers who establish Cyprus tax residency benefit from the Non-Dom regime: dividends from a Cyprus Ltd company carry 0% income tax and only 2.65% GHS (capped at €4,770 per year). The 60-day rule allows tax residency with just 60 days physical presence in Cyprus per year, provided no other country counts as the primary residence. The total effective rate for a remote worker extracting €100,000 via a Cyprus company is approximately 17% (15% corporate tax + 2.65% GHS on dividends), compared to 40–55% in Germany, France, or the UK.

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