Cyprus Income Tax

---
name: cyprus-income-tax
description: "Cyprus personal income tax for tax year 2026 (Income Tax Law 118(I)/2002 as amended by Law 244(I)/2025 from 1 January 2026; Assessment and Collection of Taxes Law 4/1978 as amended by Law 243(I)/2025). Covers resident employees, the self-employed, landlords and pensioners: the new EUR 22,000 tax-free band and the 20/25/30/35% bands, exempt dividends and interest, the 20%, 25% and 50% exemptions for people starting work in Cyprus, the one-fifth cap on contributions, the new child, housing-loan or rent and green deductions with their family income caps, 8% rates on crypto and share options, the 5% foreign pension option, SDC on dividends and interest as it stands from 2026, filing duty, the 31 July and 31 January deadlines, provisional tax, penalties and interest. Trigger on: Cyprus income tax 2026, TD1, tax-free EUR 22,000, Cyprus child deduction, provisional tax Cyprus, 50% exemption Cyprus. Out of scope: cy-non-dom, cy-cross-border, cyprus-payroll, cyprus-social-contributions, cy-corp"
license: "AGPL-3.0-or-later (code) / OpenAccountants Guide License v1.0 (content)"
metadata:
  source: openaccountants
  openaccountants_url: "https://www.openaccountants.com/skills/cyprus-income-tax"
  jurisdiction: "CY"
  tax_year: "2026"
  last_updated: "2026-10-27"
---

# Cyprus personal income tax (tax year 2026)

Cyprus taxes individuals on the calendar year. The 2026 tax reform applies from tax year 2026: Law 244(I)/2025 amends the Income Tax Law (ITL), Law 243(I)/2025 amends the Assessment and Collection of Taxes Law (ACL) and Law 245(I)/2025 amends the Special Defence Contribution (SDC) Law. All three were published on 31 December 2025 and took effect on 1 January 2026. Article numbers below are to the Greek consolidated texts on CyLaw (ITL consolidated up to Law 67(I)/2026). CyLaw is not the official gazette. For tax year 2025 and earlier, use the 2025 rules, not this skill.

Sibling skills: residence detail, non-residents and withholding are in `cy-cross-border`; domicile and SDC planning in `cy-non-dom`; PAYE in `cyprus-payroll`; Social Insurance and GHS (GESY) rates in `cyprus-social-contributions`; companies in `cy-corporate-tax`; VAT in `cyprus-vat-return`.

## Who this applies to

- **Residents are taxed on worldwide income** (ITL art. 5(1)). Non-residents are taxed only on Cyprus-source income (ITL art. 5(2)); see `cy-cross-border`.
- **183-day rule.** A person is resident if they stay in Cyprus for periods that add up to more than 183 days in the tax year (ITL art. 2, "κάτοικος της Δημοκρατίας" (α)(i)).
- **60-day rule.** A person who does not meet the 183-day rule is resident if all of these hold in the same year: they did not stay in any other single state for more than 183 days in total; they stayed in Cyprus at least 60 days; they carried on a business in Cyprus, were employed in Cyprus, or held an office in a Cyprus tax resident person at any time in the year, and that activity did not end during the year; and they kept a permanent home in Cyprus, owned or rented (ITL art. 2 (α)(ii)). The consolidated text no longer requires that the person is not tax resident in another state. Day counting: the day of departure is a day outside Cyprus, the day of arrival a day in Cyprus. Full residence detail is in `cy-cross-border`; how the 60-day rule interacts with domicile and SDC is in `cy-non-dom`.
- **Who must file from tax year 2026** (ACL art. 5(1)(α)): a resident with any gross income under ITL art. 5(1), and every resident who on 31 December has completed age 25 but not age 71, even with no income. A non-resident files if they have Cyprus-source gross income (ACL art. 5(1)(β)). The old rule that excused people with gross income below the tax-free band applies only to tax years up to 2024 (ACL art. 5(1), second proviso). The Council of Ministers may exempt categories by decree (third proviso).
- **Spouses are taxed separately.** Each person files their own return; the family income test for the new personal deductions joins the two (ITL art. 14B).
- **Out of scope here:** companies (`cy-corporate-tax`), Capital Gains Tax on Cyprus immovable property (Capital Gains Tax Law 52/1980), employer PAYE mechanics (`cyprus-payroll`).

## Rates, bands and thresholds

| Item | Rate or amount | Year | Source |
|---|---|---|---|
| 0% band, chargeable income up to | EUR 22,000 | 2026 | ITL art. 25 and Second Schedule para. 1(γ), https://www.cylaw.org/nomoi/enop/non-ind/2002_1_118/full.html |
| 20% band | EUR 22,001 to 32,000 | 2026 | ITL Second Schedule para. 1(γ), same URL |
| 25% band | EUR 32,001 to 42,000 | 2026 | ITL Second Schedule para. 1(γ), same URL |
| 30% band | EUR 42,001 to 72,000 | 2026 | ITL Second Schedule para. 1(γ), same URL |
| 35% band | over EUR 72,000 | 2026 | ITL Second Schedule para. 1(γ), same URL |
| Tax at the top of the 20%, 25% and 30% bands (cumulative) | EUR 2,000 / 4,500 / 13,500 | 2026 | Computed from the bands; the Tax Department return page prints the same figures, https://www.gov.cy/mof-tax/en/documents/forologiki-dilosi-eisodimatos-atomoy/ |
| 0% band before the reform (2008 to 2025, not for 2026) | EUR 19,500 | 2025 | ITL Second Schedule para. 1(β), same CyLaw URL |
| Interest income of individuals | Exempt from income tax | 2026 | ITL art. 8(19), same CyLaw URL |
| Dividend income | Exempt from income tax | 2026 | ITL art. 8(20), same CyLaw URL |
| Gains on disposal of titles (shares, bonds and similar) | Exempt from income tax | 2026 | ITL art. 8(22), same CyLaw URL |
| First-employment exemption, art. 8(21A) | 20% of pay, max EUR 8,550 a year | 2026 | ITL art. 8(21A), same CyLaw URL |
| Returning-resident exemption, art. 8(21B) | 25% of Cyprus pay or business profit, max EUR 25,000 a year; pay or profit must exceed EUR 30,000 | 2026 | ITL art. 8(21B), same CyLaw URL |
| High-earner exemption, art. 8(23A) | 50% of Cyprus pay, where pay exceeds EUR 55,000 | 2026 | ITL art. 8(23A), same CyLaw URL |
| Cap on art. 14 contributions and premiums | 1/5 of taxable income before art. 14 and 14B deductions | 2026 | ITL art. 14(2), same CyLaw URL |
| Life or disability premium | Up to 7% of the sum insured | 2026 | ITL art. 14(1)(α) proviso (i), same CyLaw URL |
| Approved pension fund or pension plan contributions | Up to 10% of non-exempt art. 5 income | 2026 | ITL art. 14(1)(γ) proviso, same CyLaw URL |
| Approved medical scheme premiums | Up to 2% of non-exempt art. 5 income | 2026 | ITL art. 14(1)(δ) proviso, same CyLaw URL |
| Home insurance against natural disasters | Up to EUR 500 | 2026 | ITL art. 9(1)(ζ)(ββ), same CyLaw URL |
| Donations to approved cultural bodies | Up to EUR 50,000; cannot create a loss carried forward | 2026 | ITL art. 9(1)(ν), same CyLaw URL |
| Child deduction, per parent | EUR 1,000 first child, EUR 1,250 second, EUR 1,500 third and each further; doubled for single-parent families | 2026 | ITL art. 14B(1)(α), same CyLaw URL |
| Housing-loan interest or rent on the main home | Up to EUR 2,000 per spouse, partner or single person | 2026 | ITL art. 14B(1)(β), same CyLaw URL |
| Green deduction (home energy upgrade, renewables, batteries, electric vehicle) | Up to EUR 1,000 per spouse, partner or single person; excess carried 4 years | 2026 | ITL art. 14B(1)(γ), same CyLaw URL |
| Family income cap for art. 14B: no children, or up to 2 children | EUR 100,000 | 2026 | ITL art. 14B(1)(α) and (β)(i), same CyLaw URL |
| Family income cap: 3 or 4 children | EUR 150,000 | 2026 | ITL art. 14B(1)(β)(ii), same CyLaw URL |
| Family income cap: 5 or more children | EUR 200,000 | 2026 | ITL art. 14B(1)(β)(iii), same CyLaw URL |
| Income cap for a single person | EUR 40,000 | 2026 | ITL art. 14B(1)(γ), same CyLaw URL |
| Let buildings: flat deduction from gross rent | 20% | 2026 | ITL art. 9(2), same CyLaw URL |
| Business entertainment allowed | Up to 1% of gross receipts, max EUR 30,000 | 2026 | ITL art. 11(12), same CyLaw URL |
| Foreign pension (services abroad), optional rate | 5% on the amount over EUR 5,000 | 2026 | ITL art. 20, same CyLaw URL |
| Crypto-asset disposal gains | 8% | 2026 | ITL art. 20E(1), same CyLaw URL |
| Approved employee share option or share award plans | 8%, up to twice the year's pay from that employer and EUR 1,000,000 per rolling 10 years | 2026 | ITL art. 20D(1) and (2), same CyLaw URL |
| AIF carried interest and UCITS performance fees (optional) | 8%, minimum tax EUR 10,000 a year | 2026 | ITL arts. 20B(4), (7) and 20C(4), (7), same CyLaw URL |
| Energy-efficiency capital spending 2023 to 2030: building fabric / efficiency systems, renewables and batteries / electric vehicles | 7% / 20% / 33 1/3% a year | 2026 | ITL art. 10(2), third proviso (α) to (γ), same CyLaw URL |
| SDC on dividends, resident and domiciled individual, profits of 2026 onward | 5% | 2026 | SDC Law art. 3(1)(α), https://www.cylaw.org/nomoi/enop/non-ind/2002_1_117/full.html |
| SDC on dividends from a Cyprus-resident company paid out of profits of 2025 or earlier, received within six years from 1 January 2026 | 17% | 2026 | SDC Law art. 3(1)(α) proviso (ii), same URL |
| SDC on interest, resident and domiciled individual | 17% (3% on government savings certificates and development bonds and listed bonds) | 2026 | SDC Law art. 3B(α)(i) and (β)(i), same URL |
| SDC interest refund: total income not over | EUR 12,000 (refund of SDC above 3%) | 2026 | SDC Law art. 3B(α)(i), second proviso, same URL |
| Deemed domicile for SDC | Resident 17 of the last 20 years | 2026 | SDC Law art. 2(3) proviso (i), same URL |
| Accounts: business turnover up to which none are required | EUR 120,000 | 2026 | ACL art. 30(1) proviso (ii)(αα), https://www.cylaw.org/nomoi/enop/non-ind/1978_1_4/full.html |
| Reviewed (not audited) accounts allowed | Turnover over EUR 120,000 and up to EUR 200,000, and total assets up to EUR 500,000, for at least two consecutive years | 2026 | ACL art. 30(1) proviso (ii)(ββ), same URL |
| Late filing charge, individual | EUR 150 | 2026 | ACL art. 50A(α), same URL |
| Charge for not complying with a written notice, individual | EUR 300 | 2026 | ACL art. 50A(β) to (δ), same URL |
| Late payment charge | 5%, plus another 5% if still unpaid 2 months after the due date | 2026 | ACL art. 50A(ε), same URL |
| Provisional tax underestimate charge | 1/10 of the gap between final tax and provisional tax, when provisional chargeable income is below 3/4 of the final figure | 2026 | ACL art. 26(1), same URL |
| Default interest rate | 3.50% a year from 1 January 2026 | 2026 | ACL art. 39(1); Public Default Interest Rate for 2026 Order, K.D.P. 376/2025, para. 2, https://www.cylaw.org/KDP/data/2025_1_376.pdf |
| Ex gratia retirement or termination payments, early-retirement scheme benefits and non-contractual termination pay over EUR 200,000 | 20%, taxed alone | 2026 | ITL art. 20ΣΤ with art. 5(1)(β)(iv) to (vi), https://www.cylaw.org/nomoi/enop/non-ind/2002_1_118/full.html |

Above EUR 72,000, tax is EUR 13,500 plus 35% of the excess.

## The taxable base

**Order of the computation.** Gross income under ITL art. 5, less exempt income (art. 8), less business expenses and allowances (arts. 9 to 11), less losses (art. 13), less the art. 14 contributions within the one-fifth cap, less the art. 14B personal deductions, gives chargeable income. Apply the bands. Income taxed at a special rate (arts. 20, 20B to 20E) is taxed on its own and not added to other income.

**Employment.** All pay and benefits for an office or employment are taxable, including allowances, joining inducements, ex gratia payments on leaving and non-contractual termination pay (ITL art. 5(1)(β)). Ex gratia retirement or termination payments, early-retirement scheme benefits and non-contractual termination pay (art. 5(1)(β)(iv) to (vi)) that exceed EUR 200,000 are taxed at 20% under art. 20ΣΤ and not added to other income; refer these. A loan or cash facility from a company to a director or individual shareholder (or their spouse or a relative to the second degree) is a deemed monthly benefit of 9% a year on the balance (ITL art. 5(1)(ζ)).

**Business profit.** Expenses are deductible only if incurred wholly and exclusively to earn the income (ITL art. 9(1)). Not deductible (ITL art. 11): household or private spending, including home to work travel; tax itself; capital withdrawn or capital spending; improvements; amounts recoverable from insurance; private motor vehicle expenses (art. 11(13)); interest on the cost of a private motor vehicle, or of any other asset not used in the business, for 7 years from its purchase (art. 11(15)); and business entertainment above 1% of gross receipts or EUR 30,000 (art. 11(12)). A private motor vehicle is not plant or machinery for capital allowances (ITL art. 10(1), proviso). Capital spending is relieved through wear-and-tear allowances (ITL art. 10); capital spending in 2023 to 2030 gets 7% a year for a building's insulation and window replacement, 20% for efficiency systems, renewables and storage batteries, and 33 1/3% for electric vehicles (art. 10(2), third proviso). Pay on which Social Insurance and other fund contributions are not paid in the year they fall due is not deductible until they are paid within the time the law allows, and rent paid in breach of ACL art. 48A is not deductible (ITL art. 9).

**Rent.** Rent is taxed at the bands. Deduct 20% of gross rent from buildings, then wear and tear and interest (ITL art. 9(2)). From 2026 there is no SDC on rent (the SDC Law no longer charges it). From 1 July 2026 rent for property in Cyprus may be paid only by bank transfer, card or another recognised electronic means, and the landlord may not accept any other method (ACL art. 48A, in force 1 July 2026 under Law 243(I)/2025 s. 35(β)). Tax on rent is paid through provisional tax (see Deadlines). The Tax Department's FAQs (question 53) say a tenant that is a company still withholds GHS from the rent; rates are in `cyprus-social-contributions`.

**Dividends, interest and securities gains.** None is taxed at the bands (ITL art. 8(19), (20), (22)). A resident who is also domiciled in Cyprus pays SDC on dividends and interest (SDC Law arts. 2, 3, 3B):
- Dividends out of profits of 2026 onward: 5%.
- Dividends from a Cyprus-resident company out of profits up to tax year 2025, received within six years from 1 January 2026: 17%. The rate follows the year of the profits, not the year the dividend is paid.
- A disguised dividend distribution from a Cyprus-resident company to a shareholder (for example company assets used privately) carries 10% SDC (SDC Law art. 3A); refer these.
- Interest: 17%, or 3% on Cyprus or EU government savings certificates and development bonds and on listed bonds. A person whose total income, interest included, is not over EUR 12,000 can reclaim SDC withheld on interest above 3%.
- A resident who is not domiciled pays no SDC. Deemed domicile after 17 of the last 20 years of residence; the rules are in `cy-non-dom`.
- GHS also applies to this income; see `cyprus-social-contributions`.
- From 1 January 2031, a gain on redeeming a unit or share in an open- or closed-ended collective investment scheme set up as a company, less any Capital Gains Tax paid on that redemption, is a dividend (ITL art. 8(20), last proviso, in force from 1 January 2031 under Law 224(I)/2025). Not relevant to 2026, but it changes the treatment of such redemptions from that date.

**Exemptions for people starting work in Cyprus.** The law stops them stacking; check the exclusion lines.
- **Art. 8(21A), 20%.** 20% of pay from the first employment in Cyprus, capped at EUR 8,550 a year, for a person who for the 3 consecutive years before starting worked outside Cyprus for a non-resident employer. First employment must start after the publication of the Income Tax (Amendment) (No. 6) Law of 2022 and up to 2027. Granted for 7 tax years starting the year after the year employment began. No minimum pay. "First employment" has the art. 8(23A) meaning.
- **Art. 8(21B), 25% (new; starts from 1 January 2025 to 2030).** 25% of pay from any employment in Cyprus or of profit from a business in Cyprus, capped at EUR 25,000 a year. Conditions: not resident in the 7 tax years before the start year; resident in some year before those 7; pay or profit over EUR 30,000 in the first 12 months; and either a recognised university degree plus at least 36 of the previous 84 months in full-time work abroad for a non-resident employer, or 84 months of such work. Given in the start year and the next 6 years, in each year only if the person is resident (except the start year) and Cyprus pay or profit exceeds EUR 30,000 that year. Once in a lifetime. If 8(21B) is given, 8(21A) is not.
- **Art. 8(23A), 50%.** 50% of pay from employment in Cyprus for a person not resident for at least 15 consecutive years before their first employment in Cyprus, where that first employment starts from 1 January 2022. "First employment" means starting paid work in Cyprus, for a resident or non-resident employer, for the first time after 15 consecutive tax years with no paid work in Cyprus. Given for 17 tax years from the start year, in any year where Cyprus pay exceeds EUR 55,000; in the start year, if pay in the first 12 months exceeds EUR 55,000. Once in a lifetime. If 8(23A) is given, 8(21), 8(21A), 8(21B) and 8(23) are not. Transitional rules cover people whose first employment began in 2016 to 2021; refer those.
- **Old art. 8(21) and 8(23).** Still in the law for employments that began before the Income Tax (Amendment) (No. 6) Law of 2022 came into force. Apply only to those older cases.
  - Old 8(21): 20% of pay from any employment in Cyprus, or EUR 8,550 if less, for a person who was resident outside Cyprus before the employment began, for employment that began from 2012 up to that commencement date. It runs from 1 January of the year after the employment began, for at most 5 years (ITL art. 8(21)).
  - Old 8(23): 50% of pay from any employment in Cyprus for a person resident outside Cyprus before it began, given for 10 years from the year employment began, in any year where that pay exceeds EUR 100,000 (pay may dip below EUR 100,000 in a year if it exceeded it when employment began and the Commissioner accepts the dip is not an arrangement). Not given to a person resident in Cyprus in any 3 of the 5 tax years before the start year, or in the year before the start year; this bar applies to employment that began on or after the Income Tax (Amendment) (No. 2) Law of 2015 came into force (proviso (v)). Where 8(23) applies, 8(21) does not (ITL art. 8(23), provisos (i) to (v)).
- **Art. 8(23A) under its pre-2023 wording.** A person who was entitled to the 8(23A) 50% exemption before the publication of the Income Tax (Amendment) Law of 2023 keeps it, provided the conditions of 8(23A) as they stood before that law are met (ITL art. 8(23A), last proviso). Refer these cases for the old conditions.

**Subscriptions.** Subscriptions to trade unions and professional bodies are deducted before the one-fifth cap is measured (Tax Department form TD59 2026, Part B line 1).

**Contributions and premiums (art. 14).** Deductible: Social Insurance and similar EU fund contributions; approved pension and provident fund contributions and approved pension plan premiums (together up to 10% of non-exempt art. 5 income); approved medical scheme premiums (up to 2%); GHS contributions; life or disability premiums (each up to 7% of the sum insured). The total cannot exceed one fifth of taxable income before the art. 14 and art. 14B deductions (art. 14(2)). Surrendering a life policy within 3 years adds back 30% of the premiums relieved; in years 4 to 6, 20% (art. 14(1)(α)(iii)).

**New personal deductions (art. 14B), residents only.** Given only if family income is not over the cap for the number of children on 31 December (EUR 100,000 for none, one or two; EUR 150,000 for three or four; EUR 200,000 for five or more; EUR 40,000 for a single person living alone). It is a cliff: one euro over and every art. 14B deduction is lost. They sit outside the one-fifth cap.
- Children: EUR 1,000, 1,250, then 1,500 for each further dependent child, to each parent; doubled for a single-parent family or where one parent has full custody. Students up to age 24 count as dependent children.
- Housing: up to EUR 2,000 for interest on a serviced loan to buy or build the main home in Cyprus, or for rent on the main home in Cyprus. One cap covers both. For the loan, the home must belong to at least one of the couple (or the single person) and the loan must be in their name. A restructured loan counts as serviced if instalments are paid without fail. Public grants reduce the amount. Rent paid in breach of ACL art. 48A gets no deduction.
- Green: up to EUR 1,000 for capital spending on the main home's energy efficiency, energy systems, renewables or storage batteries, or on an electric vehicle registered with the Road Transport Department. Unused spending carries forward 4 years. Grants reduce it; the two partners together cannot deduct more than the spending.
- Conditions (art. 14B(2)): both returns (or the single person's) filed by the ACL art. 5 deadline, and both partners consent to share their tax data. "Family income" takes the meaning in the Child Benefit Law (art. 14B(3)(α)). The Tax Department's FAQs (questions 14 and 15) say it counts the gross income of all family members from every source in Cyprus or abroad, including a partner with whom the taxpayer has children, and leaves out students' own work income, child benefit, student grants and disability benefits.

**Losses (ITL art. 13).** A loss not set off against other income of the year is carried forward. For a person required to keep audited accounts, a loss cannot be used more than 7 years after the end of the loss year (art. 13(1), first proviso). Foreign business losses are set off against other income of the year, the rest carried forward (art. 13(9)). No loss is allowed for a year whose accounts are filed more than 6 years late (art. 13(3)). A sole trader who turns the business into a company can pass the accumulated losses to it (art. 13(10)). Crypto losses offset only crypto gains of the same year and are never carried forward (art. 20E(2)).

**Special rates (taxed alone).**
- Crypto-asset disposals (sale, gift, swap, use as payment): 8% (art. 20E). Crypto from mining is outside 20E and taxed at the bands (art. 20E(4)).
- Approved share option or award plans: 8% on the benefit up to twice the year's pay from that employer and EUR 1,000,000 per rolling ten years; the excess is taxed at the bands (art. 20D).
- Foreign pension for services abroad: 5% above EUR 5,000, or the bands, chosen each year (art. 20).
- AIF carried interest and UCITS performance fees: 8% with EUR 10,000 minimum tax, chosen year by year; a person who chooses it loses the art. 8(21), (21A), (21B), (23) and (23A) exemptions (arts. 20B and 20C, para. (7)).

## Deadlines and filing

| What | When | Source |
|---|---|---|
| Provisional tax computation for 2026 | By 31 July 2026; can be revised up to 31 December 2026 | ACL art. 24 |
| Provisional tax payments | Two equal instalments, 31 July and 31 December 2026 | ACL art. 38(1)(γ) |
| Income other than pay that starts after 30 June | One computation and one payment by 31 December of that year | ACL art. 24, third proviso; art. 38(1)(γ) proviso |
| Return and self-assessment payment, no audited or reviewed accounts required | 31 July 2027 | ACL art. 5(1A); art. 38(1), 2026 proviso (i) |
| Return and self-assessment payment, audited or reviewed accounts required | 31 January 2028 | ACL art. 5(1A) first proviso; art. 38(1), 2026 proviso (ii) |
| Return for tax year 2025 (extended; not the 2026 date) | 31 October 2026 | Tax Department return page |
| Records | Keep 6 years from the later of the filing deadline and the actual filing date | ACL arts. 5(7)(α) and 30(2) |

- Provisional tax is declared on temporary declaration code 0200 through the Tax portal by the end of July (Tax Department form TD59 2026 notes).
- Provisional tax applies to anyone with income other than employment income (ACL art. 24); employees with only PAYE pay have their tax withheld (see `cyprus-payroll`). If no computation is filed, the provisional figure counts as nil for the underestimate charge (ACL art. 26(1), second proviso), and the Tax Department may assess provisional tax on the last assessed year (art. 25).
- From tax year 2026 returns are filed only through the Tax For All (TFA) system (Tax Department return page). The Council of Ministers may set a later deadline by decree (ACL art. 5(1A), second proviso). If the Tax Department extends the deadline by public notice, filing and paying within the extension carries no late charge (ACL art. 50A(α) and (ε) provisos).
- Accounts (ACL art. 30(1)): a self-employed person whose turnover and other business-type gross income is not over EUR 120,000 need not prepare accounts. Over EUR 120,000 but not over EUR 200,000, with total assets not over EUR 500,000, for at least two consecutive years, accounts may be reviewed rather than audited. Otherwise they are audited. A person not in business needs no accounts.
- Employees claim the new deductions through their employer on form TD59 (Τ.Φ.59) and again in the return (Tax Department FAQs, question 11).

## Penalties and interest

- **Late filing** (ACL art. 50A(α)): EUR 150 for an individual. Failing to comply with a written notice giving at least 60 days: EUR 300 (art. 50A(β) to (δ)).
- **Late payment** (ACL art. 50A(ε)): 5% of the tax due, plus another 5% if still unpaid 2 months after the due date.
- **Interest** (ACL art. 39(1)): at the public default interest rate, which the Tax Department states is 3.5% a year from 1 January 2026. For 2026 tax it runs from 1 August 2027 (31 July filers) or 1 February 2028 (31 January filers).
- **Provisional tax too low** (ACL art. 26(1)): if provisional chargeable income is below three quarters of the final figure, the person pays an extra one tenth of the difference between the final tax and the provisional tax. Overpaid provisional tax is refunded (art. 26(2)).
- **Loss of reliefs:** a late return by either partner loses the art. 14B deductions (ITL art. 14B(2)(α)).
- **Assessment window:** the Tax Department can assess within 6 years from the later of the filing of the return and of any revised return (ACL art. 23(1)); 12 years for fraud or wilful default (art. 23(2)).
- **Business closure:** the Tax Department can suspend a business and seal its premises for up to 10 days if the person fails, on or after 1 January 2027, to file at least two tax returns (or twelve monthly withholding returns or three VAT returns); fails to pay tax due where the total owed, charges included, exceeds EUR 20,000; does not issue proper invoices or receipts; or obstructs an audit. Three registered-mail notices must come first (ACL art. 32A(1) and (2)). Refer any client facing enforcement.
- **SDC:** late payment of SDC carries 5%, and another 5% if still unpaid 2 months after the due date (SDC Law art. 7B(ε)); see `cy-non-dom`.

## Cross-border points

- A non-resident is taxed only on Cyprus-source income and files only if they have it (ITL art. 5(2); ACL art. 5(1)(β)). Withholding on payments to non-residents is in `cy-cross-border`.
- Foreign tax on foreign income is credited under a treaty or unilaterally (ITL arts. 34 to 36); see `cy-cross-border`.
- Pensions for services abroad: choose 5% over EUR 5,000 or the bands each year (ITL art. 20).
- Arrivals: check the 20%, 25% and 50% exemptions above and the 60-day rule. Domicile and the 17-of-20-years deemed domicile test decide SDC; see `cy-non-dom`.
- Social security for people working in more than one EU state follows Regulation 883/2004; see `cyprus-social-contributions` and `cy-cross-border`.

## Worked examples

### Example 1: employee with one child, salary EUR 50,000

Maria is resident and domiciled in Cyprus and has worked for a Cyprus employer for years, so no first-employment exemption applies. Her 2026 salary is EUR 50,000. Social Insurance and GHS deducted from her pay total EUR 5,725 (rates in `cyprus-social-contributions`). She has one child. Family income is EUR 80,000, under the EUR 100,000 cap for one or two children, and both partners file on time and consent.

The one-fifth cap is EUR 10,000 (EUR 50,000 / 5), so all EUR 5,725 of contributions are deductible. Her child deduction is EUR 1,000. Chargeable income is EUR 43,275. Tax is EUR 4,500 to the top of the 25% band plus 30% of EUR 1,275, so EUR 4,882.50. Her PAYE is credited against this, and her return is due by 31 July 2027.

```oa-check
name: Maria, employee, salary EUR 50,000, one child (2026 bands)
inputs:
  salary: 50000
  contributions: 5725
  child_deduction: 1000
steps:
  - one_fifth_cap: salary / 5
  - contribution_deduction: min(contributions, one_fifth_cap)
  - chargeable: salary - contribution_deduction - child_deduction
  - tax: max(0, min(chargeable, 32000) - 22000) * 0.20 + max(0, min(chargeable, 42000) - 32000) * 0.25 + max(0, min(chargeable, 72000) - 42000) * 0.30 + max(0, chargeable - 72000) * 0.35
expected:
  one_fifth_cap: 10000
  contribution_deduction: 5725
  chargeable: 43275
  tax: 4882.50
```

### Example 2: self-employed, one-fifth cap binds, family income over the cap, provisional tax too low

Andreas is a resident self-employed consultant. His 2026 turnover is EUR 110,000 (not over EUR 120,000, so no accounts are required and his return is due 31 July 2027) and his profit is EUR 90,000. He paid EUR 16,000 of Social Insurance and GHS and EUR 3,000 of life premiums (within 7% of the sum insured). He has two children and a housing loan with EUR 2,500 of interest. His spouse earns EUR 15,000, so family income is EUR 105,000.

Contributions and premiums total EUR 19,000, but the one-fifth cap is EUR 18,000, so EUR 18,000 is deducted. Family income is over the EUR 100,000 cap for two children, so he gets no child or housing deduction (EUR 1,000 + 1,250 + 2,000 = 4,250 lost), and neither does his spouse. Chargeable income is EUR 72,000 and tax is EUR 13,500. Had the family been within the cap, chargeable income would be EUR 67,750 and tax EUR 12,225: the cliff costs him EUR 1,275.

In July 2026 he declared provisional chargeable income of EUR 50,000 (provisional tax EUR 6,900, paid in two instalments). That is below three quarters of EUR 72,000 (EUR 54,000), so he owes an extra one tenth of (13,500 - 6,900), which is EUR 660, on top of the EUR 6,600 balance due by 31 July 2027.

```oa-check
name: Andreas, self-employed, profit EUR 90,000, cap binds, family income over EUR 100,000, provisional tax charge
inputs:
  profit: 90000
  contributions: 16000
  life_premiums: 3000
  child_1: 1000
  child_2: 1250
  housing_cap: 2000
  provisional_chargeable: 50000
steps:
  - art14_total: contributions + life_premiums
  - one_fifth_cap: profit / 5
  - art14_deduction: min(art14_total, one_fifth_cap)
  - chargeable: profit - art14_deduction
  - tax: max(0, min(chargeable, 32000) - 22000) * 0.20 + max(0, min(chargeable, 42000) - 32000) * 0.25 + max(0, min(chargeable, 72000) - 42000) * 0.30 + max(0, chargeable - 72000) * 0.35
  - lost_14b: child_1 + child_2 + housing_cap
  - chargeable_if_within_cap: chargeable - lost_14b
  - tax_if_within_cap: max(0, min(chargeable_if_within_cap, 32000) - 22000) * 0.20 + max(0, min(chargeable_if_within_cap, 42000) - 32000) * 0.25 + max(0, min(chargeable_if_within_cap, 72000) - 42000) * 0.30 + max(0, chargeable_if_within_cap - 72000) * 0.35
  - cliff_cost: tax - tax_if_within_cap
  - provisional_tax: max(0, min(provisional_chargeable, 32000) - 22000) * 0.20 + max(0, min(provisional_chargeable, 42000) - 32000) * 0.25 + max(0, min(provisional_chargeable, 72000) - 42000) * 0.30 + max(0, provisional_chargeable - 72000) * 0.35
  - three_quarters: chargeable * 0.75
  - underestimate_charge: (tax - provisional_tax) / 10
  - balance_due: tax - provisional_tax
expected:
  art14_total: 19000
  one_fifth_cap: 18000
  art14_deduction: 18000
  chargeable: 72000
  tax: 13500
  lost_14b: 4250
  chargeable_if_within_cap: 67750
  tax_if_within_cap: 12225
  cliff_cost: 1275
  provisional_tax: 6900
  three_quarters: 54000
  underestimate_charge: 660
  balance_due: 6600
```

## Ask the client first

- How many days were you in Cyprus in 2026 and in any other single country, and did you have a Cyprus job, business or directorship and a Cyprus home through 31 December? (Residence: 183-day or 60-day rule.)
- Where is your domicile of origin, and in how many of the last 20 years were you Cyprus resident? (SDC on dividends and interest; `cy-non-dom`.)
- When did you start work or business in Cyprus, where did you live and work in the 15 years before, and what is your annual pay or profit? (Which of the 20%, 25% or 50% exemptions applies.)
- What was the gross income of every family member for 2026, from all countries, how many dependent children do you have on 31 December, and will your partner consent in their return? (Art. 14B caps.)
- What was your business turnover and total assets, and what provisional tax did you declare? (Accounts, the 31 July or 31 January deadline, the underestimate charge.)
- Did you have rent, dividends (out of which year's profits), interest, crypto disposals, share options or a foreign pension? (Special rates and SDC.)

## Sources

| Source | URL | Read on |
|---|---|---|
| Income Tax Law 118(I)/2002, consolidated to Law 67(I)/2026 (CyLaw): arts. 2, 5, 8, 9, 10, 11, 13, 14, 14B, 20, 20B to 20ΣΤ, 25, 34 to 36, Second Schedule | https://www.cylaw.org/nomoi/enop/non-ind/2002_1_118/full.html | 2026-10-24 |
| Income Tax (Amendment) (No. 4) Law 244(I)/2025, s. 25 commencement 1 January 2026 | https://www.cylaw.org/nomoi/arith/2025_1_244.pdf | 2026-10-24 |
| Special Defence Contribution Law 117(I)/2002, consolidated (CyLaw): arts. 2, 3, 3A, 3B, 7B | https://www.cylaw.org/nomoi/enop/non-ind/2002_1_117/full.html | 2026-10-24 |
| SDC (Amendment) (No. 4) Law 245(I)/2025, s. 10 commencement 1 January 2026 | https://www.cylaw.org/nomoi/arith/2025_1_245.pdf | 2026-10-24 |
| Assessment and Collection of Taxes Law 4/1978, consolidated (CyLaw): arts. 5, 23 to 26, 30, 32A, 38, 39, 48A, 50A | https://www.cylaw.org/nomoi/enop/non-ind/1978_1_4/full.html | 2026-10-24 |
| ACL (Amendment) (No. 2) Law 243(I)/2025, s. 35 commencement (1 January 2026; art. 48A from 1 July 2026) | https://www.cylaw.org/nomoi/arith/2025_1_243.pdf | 2026-10-24 |
| Tax Department, Individual Income Tax Return page (TFA from 2026, 2025 deadline 31 October 2026, band table) | https://www.gov.cy/mof-tax/en/documents/forologiki-dilosi-eisodimatos-atomoy/ | 2026-10-24 |
| Tax Department, FAQs on the 2026 reform for individuals (11 May 2026): 2026 return due 31 July 2027, family income, TD59, GHS on rent | https://www.gov.cy/media/sites/167/2026/05/FAQs-110526.pdf | 2026-10-24 |
| Public Default Interest Rate for 2026 Order, K.D.P. 376/2025 (3.50% from 1 January 2026) | https://www.cylaw.org/KDP/data/2025_1_376.pdf | 2026-10-24 |
| Tax Department, presentation on the ACL amendments (default interest 3.5% from 1 January 2026) | https://www.gov.cy/media/sites/167/2026/03/2026-%CE%A6%CE%BF%CF%81%CE%9C%CE%B5%CF%84%CE%B1%CF%81%CF%81%CF%8D%CE%B8%CE%BC%CE%B9%CF%83%CE%B7-%CE%9D%CF%8C%CE%BC%CE%BF%CE%B9-%CE%A0%CE%92%CE%95-%CE%95%CE%B9%CF%83%CF%80%CF%81%CE%AC%CE%BE%CE%B5%CF%89%CF%82-%CE%A7%CE%B1%CF%81%CF%84%CE%BF%CF%83%CE%AE%CE%BC%CF%89%CE%BD.pdf | 2026-10-24 |

Not yet confirmed: the general wear-and-tear rates by asset class (set by the notification under art. 52A of the repealed Income Tax Law 58/1961, kept in force by ITL art. 47; no official copy found on CyLaw or the Tax Department site, and secondary tables are not cited); the publication date of the Income Tax (Amendment) (No. 6) Law of 2022 that opens art. 8(21A) (the Tax Department table read for v0.1 gave 26 July 2022); the transitional art. 8(23A) rules for 2016 to 2021 starters; the pre-2023 art. 8(23A) conditions (v0.1 gave, from the Tax Department table: for employment started 1 January 2022 to 29 June 2023, non-residence for at least 10 years and the exemption ending when the first employment ends; not printed in the consolidated text); whether art. 8(21A) also ends when the first employment ends and whether 8(21) and 8(21A) are given whether or not the person becomes resident (v0.1, Tax Department explanatory table, not in the consolidated text); the pre-2026 figures of EUR 70,000 (accounts threshold) and EUR 3,420 (foreign pension threshold) from v0.1 (Tax Department presentations, not re-read; not needed for 2026); how the art. 14B(1)(β) ownership proviso applies to the rent limb; whether the art. 20ΣΤ 20% rate applies to the whole payment or only to the part over EUR 200,000; the self-employed GHS rate, Social Insurance categories, the 2.65% GHS on pay and the 2026 insurable earnings ceiling from v0.1 (now only in `cyprus-social-contributions`, not re-read here); the landlord's GHS self-assessment on rent with no withholding (v0.1, FAQs question 54, not re-read); the bad-debt conditions, home-office, phone and vehicle apportionment working rules, VAT interaction table, bank-statement classification patterns, Cyprus bank formats and the working-paper template from v0.1 (practice notes, not law, not carried).

## Today's figures and who stands behind this skill

This file is an AI skill (tax rules your AI follows) from OpenAccountants, copied on 2026-10-27. Rates, thresholds and deadlines change. For the current version of this skill, its official sources and the named accountant (if any) who stands behind it, call `get_skill` with slug `cyprus-income-tax` on the OpenAccountants connector (https://www.openaccountants.com/connect), or read https://www.openaccountants.com/skills/cyprus-income-tax. If neither is available, confirm every figure against the official source pages cited above before relying on it.