Taxation of international executives
Based on the Special Contribution for Employees Pensioners and Self-employed individuals of the Private Sector Law of 2011 (L.202(I)/2011) the Special Contribution for the Employees, self-employed and pensioners of the private sector has expired on 31 December 2016.
Are there social security/social insurance taxes in Cyprus? If so, what are the rates for employers and employees?
The current social insurance rates in Cyprus are as follows:
|Type of insurance||Paid by employer||Paid by employee||Total|
|Training and development*||0.5%||-||0.5%|
* For the 2019 year the maximum amount of insurable earnings has been set to EUR1,051 per week, EUR4,554 per month and EUR54,648 per annum.
** Contributions to the Social Cohesion Fund are calculated on actual earnings, not subject to the above cap.
The Cyprus social insurance scheme is earnings related and is obligatory with some exceptions for all employed and self-employed persons on the island. Non-employed persons may under certain conditions join the scheme on a voluntary basis.
For the purpose of calculating employees contributions the actual gross earnings, subject to ceilings as mentioned above, are taken into consideration. In the case of the self-employed, however, the law prescribes notional income, which varies according to the occupational category.
The social insurance scheme provides equality of treatment for nationals and non-nationals. Non-resident companies have the same obligations for the payment of contributions to the social insurance fund and to the various other funds, as all other employers.
Contributions to the various funds are tax deductible. The employer’s contribution is not considered taxable income to the employee. Capital sums payable out of these funds do not form part of the taxable income of the recipients.
The employer is liable for withholding and remitting the total amount of contributions. All contributions are remitted to the Social Insurance Office in the month following.
National Health Insurance System
The National Health Insurance System Law (NHIS) of 2010 (as amended in 2017) has come into effect as of 1 March 2019.
Under the NHIS rules, employers will be contributing 1.85 percent and employees 1.70 percent on the employee’s gross earnings up to maximum annual earnings of EUR180,000. Furthermore, it should be noted that the NHIS contributions are to be revised upwards as of 1 March 2020 to 2.65 percent.
Please find below a table summarizing the contribution rates for National Health Insurance System in Cyprus:
|Category||As from March 2019||As from March 2020|
|Income earners (e.g. rents, interests, dividends)||1.70%||2.65%|
|Persons holding office||1.70%||2.65%|
Are there any gift, wealth, estate, and/or inheritance taxes in Cyprus?
Immovable property tax has been abolished as from 1 January 2017.
Are there sales and/or value-added taxes in Cyprus?
Yes, there is VAT. As from 13 January 2014 the Standard VAT rate is 19 percent. Further, a reduced VAT rate of 5 percent applies to various products and services such as food items, entry fees to theaters, cinemas and other similar cultural events.
A reduced VAT rate of 9 percent, among others applies to various pharmaceutical products, hotel accommodation and public and private transport.
Are there unemployment taxes in Cyprus?
Are there additional taxes in Cyprus that may be relevant to the general assignee? For example, customs tax, excise tax, stamp tax, etc.
Under Stamp Duty Law, stamp duty is imposed on documents whose subject matter is property, whether tangible or intangible, situated within the territory of the Republic of Cyprus, or whose subject matter concerns issues, procedures or other objects/points which will be executed or performed in Cyprus irrespective of the place of signature of the document in question.
Please note that in accordance with the Stamp duty legislation, as of 1 March 2013 the scaled amounts of stamp duty for contracts subject to stamp duty are at the following rates:
|Value of agreement EUR||Rate|
|Up to – 5,000||0|
|5,001 – 170,000||0.15%|
|170,001 and over||0.20%*|
* Stamp duty due on agreements effected is capped at a maximum of EUR20,000 for each agreement subject to stamp duty.
Stamp duty is calculated based on the value of the contract.
Is there a requirement to declare/report offshore assets (e.g. foreign financial accounts, securities) to the country/territory’s fiscal or banking authorities?
The Government of the Republic of Cyprus has signed the CRS Multi-lateral Agreement for the implementation of CRS. The Assessment and Collection of Taxes Laws has been as such been amended to allow the automatic exchange of information in order to transpose the FATCA and CRS requirements to the Cyprus legislation. The EU has further transposed CRS within the amended EU Directive on Administrative Cooperation.
The implementation of CRS in Cyprus as such requires the reporting of Financial Accounts which fall under the decree for the application of CRS, to the Cyprus Tax Department.
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