How to pay taxes in Cyprus
The process of paying taxes in Cyprus is straightforward and transparent, especially if you have a standard employment contract. In this case, most tax obligations are handled by the employer, including automatic deductions and payments of taxes and contributions through the payroll system.
Employees only need to ensure the accuracy of calculations and submit their annual tax returns on time to account for all income and apply eligible benefits.
Below, we will outline the actions expected from you and highlight key aspects to pay attention to.
One-Time – Get your TIC
To pay taxes in Cyprus, you need a Taxpayer Identification Code (TIC), which is an 8-digit unique number followed by a letter (e.g., 12345678X). This number serves as your primary tax identifier in Cyprus.
If you are a new employee, your employer typically registers your TIC during the onboarding process and document submission.
If you have worked in Cyprus before and already have a TIC, you should provide it to your employer.
If needed, you can also register yourself through the Taxes For All portal, which offers an easy way to obtain your TIC online.
Your TIC and access to Taxes For All should be personal and ideally registered to your personal email address to ensure you retain access if you change jobs.
Once a Year – Fill and Submit IR59 form
At the beginning of each year or when you start a new job, you need to fill out and sign the IR59 (T.D.59) form – Declaration of Allowances. This form helps determine how much tax will be deducted from your salary based on your personal situation.
You must submit the completed form to your employer. It is the employer’s responsibility to calculate and withhold tax from your salary using the IR59 form.
Your employer will usually remind you to complete this form.
Once a Year – Fill and Submit TD1 form
The TD1 form – Personal Income Tax Return is a tax form used in Cyprus for the purpose of reporting and paying personal income tax. It is submitted annually via Taxes For All, the official electronic tax system of Cyprus. The submission deadline is typically in July of the following year, though the exact date may vary, so it's essential to check with tax authorities or your employer.
The TD1 form includes:
Your total income – Salary, bonuses, rental income, dividends, or any other sources of income.
Tax deductions and exemptions – You can claim deductions for social insurance, life insurance, medical expenses, and donations to approved charities.
Taxes already paid – Income tax deducted from your salary monthly is pre-filled in the system. If you have overpaid, you may be eligible for a refund.
The calculation and withholding of income tax under an employment contract, considering the IR59 form, is the employer's responsibility. The final tax return (TD1) must be submitted by you personally. It includes all your taxes from all sources of income, if you have any, not just those from employment.
Once submitted, you will receive a confirmation from Taxes For All. If any additional tax is due, it must be paid before the deadline to avoid penalties.
Your employer will usually remind you to complete this form.
Monthly – Employer Handles Tax Calculations
If you are employed under a standard contract, your employer calculates and deducts income tax from your salary each month under the Pay As You Earn (PAYE) system. This means that tax is deducted from your salary before you receive it, ensuring that your tax liability is met throughout the year. This system helps prevent large tax bills at the end of the year and ensures compliance with Cyprus tax laws.
Deductions include:
Income tax
Social insurance contributions
General Health System (GHS) contributions
Your payslip will reflect all deductions and net salary after taxes.
💡Learn more: How to read your payslip
What Else to Consider
If you have additional sources of income (e.g., freelance work, rental income, dividends), you need to declare these earnings in the TD1 form.
You can track your tax status and outstanding payments using Taxes For All, the newer online system for tax filings and payments.
By following these steps, you can ensure compliance with Cyprus tax regulations and avoid any penalties for late submissions or missed payments.
Penalties and Responsibilities
Deadlines and Penalties:
Late submission of tax returns: €100 penalty.
Late payment of taxes: 5% of the due amount, plus interest.
Errors in Tax Returns:
If income is omitted from the return, additional taxes and penalties may be applied.
For incomplete tax payments, penalties and interest will be imposed, and the return may be subject to further audits.
Responsibilities of Parties
Below is an outline of the key processes and areas of responsibility:
| Process | Description | Frequency | Responsibility |
|---|---|---|---|
| Taxpayer Registration (TIC) | Employees must obtain a Taxpayer Identification Code (TIC) for tax purposes. | Once (upon employment) | Employer / Employee |
| Monthly Tax Calculation and Deductions | Employers deduct taxes and contributions from employees' salaries and remit them to government funds. | Monthly | Employer |
| Salary Payment | Salaries are transferred to employees' bank accounts once a month. | Monthly | Employer |
| Issuance of Pay Slip | Employees receive a monthly document detailing all deductions. | Monthly | Employer |
| Declaration of Allowances (IR59) | Employees fill out and submit this form to declare their tax allowances, deductions, and benefits. | Annually (or upon starting a new job) | Employee |
| Preparation and Submission of Tax Returns (T.D.1) | Employees earning over €19,500 per year must submit an annual tax return. | Annually, by July 31 | Employee |
| Check Tax Status via TAXISnet / Taxes For All | Employees can use online platforms to monitor tax status, outstanding payments, and tax returns. | As needed | Employee |
Conclusion
The tax payment process in Cyprus is highly simplified: employers handle most calculations, and the Taxes For All portal makes managing tax obligations easy. However, it is crucial to file your tax returns on time and monitor your taxes to avoid penalties and take advantage of eligible benefits.
Stay informed about legislative updates to remain aware of changes in tax rates and deadlines for filing returns.
