Glossary: key tax terms in Cyprus
The tax system in Cyprus includes many terms and concepts that are important to understand in order to properly manage your tax obligations.
This glossary will help you navigate key terms related to salary, taxes, social and medical contributions, and tax return procedures. Knowing these terms will simplify communication with employers, tax authorities, and consultants.
Employment
Employment agreement: A document regulating the relationship between an employee and an employer, including salary, duties, and rights.
Gross remuneration / Gross salary: Salary before tax and contributions are deducted.
Net remuneration / Net salary: The amount an employee receives "in hand" after all taxes and contributions are deducted.
Monthly (gross/net) salary: Salary for one month of work, either before or after tax deductions.
Annual (gross/net) salary: Salary for one year of work, either before or after tax deductions.
Payslip: Monthly statements from the employer, showing a breakdown of salary, taxes, social contributions, and other deductions.
Taxes and Contributions
Income tax: A tax levied on income based on a progressive scale.
Progressive tax: A taxation system where the tax rate increases as income rises.
Tax Resident: A person obligated to pay taxes in Cyprus, either by residing in the country for more than 183 days a year or meeting the 60-day rule criteria.
Non-Domiciled Resident (Non-Dom): A tax status that exempts Cyprus residents from paying taxes on dividends, interest, and capital gains, provided they have not been tax residents of Cyprus for at least 17 out of the last 20 years.
Domiciled Resident (Dom): A tax status defined by a person’s legal connection to Cyprus, such as birth or long-term residence. Individuals with Dom status are subject to standard Cyprus tax obligations, including taxes on dividends, interest, capital gains, and other income.
Tax Payer’s Identification Code (TIC): A unique number assigned to every taxpayer for identification in the system.
Social insurance contributions: Mandatory contributions covering social benefits such as sick leave and unemployment benefits.
National Health Insurance System (GESY/ΓΕΣΥ): Mandatory contributions that provide access to healthcare services.
Pension Fund and Provident Fund: These are optional savings plans for retirement. Contributions can reduce your taxable income, and you may not need to pay taxes on some or all of the money when you withdraw it.
Life Insurance: You can choose to pay for life insurance, which may lower your taxable income. It also provides financial support to your family in case something happens to you.
Declarations and Deductions
Tax return: An annual report of income and taxes paid, submitted to the tax authorities.
Tax exemption: A reduction in taxable income, for example, for first-time employment in Cyprus or income earned abroad.
Tax deduction: A reduction of taxable income through social and medical contributions or other expenses.
Systems
TAXISnet: The online platform by the Cyprus Tax Department for managing taxes. It lets users register for a Tax Identification Code (TIC), file tax returns, submit forms, and access tax records
TAX PORTAL: The online platform of the Cyprus Tax Department for paying taxes.
Tax For All: The Cyprus Tax Department portal for comprehensive tax management, including filing returns, viewing statements, tracking payments, updating information, and secure communication.
Forms
T.D.2001 (Application for Obtaining a Tax Number): A form used to apply for a personal or business tax identification number in Cyprus.
T.D.1/IR1: The main form for filing an annual tax return, detailing all income for the year.
T.D.5 (Certificate of Tax Residency): Confirms your tax residency in Cyprus, used to prevent double taxation.
T.D.7 (Employee Income Certificate): Issued by the employer, this document includes details about your income, tax deductions, and social contributions.
IR59/TD.59 (Declaration of Allowances Claimed for the Year): A form completed at the beginning of the year or upon starting employment, listing income and benefits that affect your tax obligations.
🔗 Tax forms and declarations can be found on the official website of the Tax Department of Cyprus at https://www.mof.gov.cy/.
Government Authorities
Civil Registry and Migration Department: Responsible for migration, citizenship, and residency registration.
Tax Department: Manages tax collection, issues tax identification numbers, and processes tax returns.
Ministry of Finance: Regulates tax policies and oversees the country’s economic management.
Ministry of Labour and Social Insurance: Oversees social insurance matters, including pension contributions.
GESY (General Health System): The organization managing the national health insurance system.
