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G.P. Auditworld Ltd Tax Alert 1/2019

We would like to inform our clientele that in the year 2019 an increase in Social Insurance Fund Contributions will come in effect and that contributions for the implementation of the National Health Insurance System (NHIS) will commence:

Social Insurance

According to the Social Insurance Law of 2010, Social Insurance Contributions on insurable earnings will increase by 0.5% from 7.8% to 8.3% for both employees and employers as of January 1, 2019.

Contributions to the social insurance and other relevant funds are calculated on the employee’s gross earnings at the following rates:

Tax Rate
Tax Amount
Self Employed
% %
Social Insurance Fund 8.3 8.3 15.6
Redundancy Fund 1.2
Industrial Training Fund 0.5
Social Cohesion Fund 2.0


The rates mentioned above (excluding the rate applicable to contributions to the Social Cohesion Fund) are applied on the employee’s gross earnings subject to the following upper limits.

Weekly Employees 1050 54652
Monthly Employees 4554 54648

All contributions that are directly withheld from employee’s monthly salary should be paid not later than the end of the calendar month following the month that the contribution relate to.


NHIS-National Health Insurance System

According to the National Insurance law of 2010 (as amended in 2017) employer and employee contributions for the implementation of the system will be commence on March 1, 2019.

Specifically, from March 01,2019 and as of February 28, 2020, first year of the NHIS, employers’ contributions will be 1,85% and the employee’s contributions 1,70% on the employee’s earnings. The employer is responsible for withholding the applicable amount from the employer’s earnings and pay both their own and their employee’s contributions through the Social Insurance office together with the Social Insurance Contributions monthly not later than the end of the calendar month following the month that the contribution relate to.

Please note that NHIS contributions are paid on all employee earnings (as defined in the Social Insurance Law) up to €180,000; the insurable earnings limit of SIF contributions does not apply in this case.

Category 01/03/2019-29/02/2019
01/03/2020 onwards
% %
Employees/ Pensioners/ Income Earners 1.7 2.65
Employers 1.85 2.90
Self-Employed 2.55 4.00
The Rebublic or natural/legal person responsible for the remuneration of officers 1.85 2.9
The Rebublic 1.65 4.70


If you have any questions or comments, please do not hesitate to contact us.

George Pitziolis

Director  G.P. Auditworld Ltd


Tax Calendar 2019


Tax Due Dates

By the end of next month

  • Payment of PAYE deducted from employees’ emoluments
  • Payment of Tax withheld on payments made to non-Cyprus residents
  • Payment of Special Contribution for Defence withheld on payments of dividends, interest or rent to Cyprus tax residents (where the tenant is a Cyprus company, partnership, the Government or local authority).
  • Payment of Social Insurance deducted from employees’ emoluments
  • Payment of National Health Insurance System Contributions

Interest & Penalties

An administrative penalty of €100 or €200 (depending on the specific case), is imposed for the late submission of a tax return. In the case of late payment of the tax due, an additional penalty at the rate of 5% is imposed on the unpaid tax.


The official interest rate for late payment is set annually by the Finance Minister as showed below:

Interest Charge %
1/1/19 - Today 2.00%
1/1/2017 - 31/12/2018 3.50%
1/1/2015 - 31/12/2016 4.00%
1/1/2014 - 31/12/2014 4.50%
1/1/2013 - 31/12/2013 4.75%
1/1/2011 - 31/12/2012 5.00%
1/1/2010 - 31/12/2010 5.35%
1/1/2007 - 31/12/2009 8.00%

Our Tax Team

Our firms highly experience tax team with extensive knowledge of the tax law and tax environment works closely with our clients, individuals and companies, allowing them to fully exploit and benefit from the numerous tax advances of the Cyprus tax system.

We can advise and assist you or your business on any tax related matters locally or Internationally and together we can develop a clear tax plan to ensure legal and regulatory compliance and at the same time minimizing tax liability.

Our services include the following:

Personal Tax Services

  • Personal tax planning
  • Preparation and Review of tax computations and tax returns
  • Income tax and capital gains tasx planning
  • Dealings with enquiries from the Inland Revenue Department

Corporate Tax Services Locally or Internationally

  • Preparation and review of tax provisions for financial statements
  • Preparation and review of tax computations and determining tax liabilities  
  • Determining tax consequences of a specific transaction and advise on the proper tax treatment
  • Representing clients before tax authorities upon request
  • Corporate tax Planning
  • International Tax Planning
  • Tax structure optimization
  • Guidance on double tax treaties
  • Tax opinions on contracts and agreements


Our firm offers a plethora of high quality and cost-effective accounting and reporting services to help clients to focus on what they do best, growing their business. We strongly believe that accurate and timely financial information is crucial to client’s management to make informed business decisions.

Our highly skilled and experienced accounting team, uses cutting edge technology and professional accounting programs, guarantees that our clients are administered in the most cost-effective way possible.

Our services include the following:  

  • Book-keeping of company transactions (monthly, quarterly or annual basis)
  • Preparation of Management accounts and presentation to the Management monthly, quarterly or yearly  
  • Procedures for submission of V.I.E.S. returns.
  • Payroll Accounting Services
  • Invoicing Services
  • Training of client’s staff in maintaining proper books and records
  • Supervision of clients accounting department
  • Assume the role of your accounting department


Value Added Tax (VAT) is imposed on the delivery of goods and services in Cyprus and on the acquisition or importation of goods from other European Member States. VAT laws and regulations are changing constantly, and this specific area of taxation is one of the most complex areas of taxation in the European Union. Heavy penalties and fines can be imposed if the VAT returns with the relevant authorities are not made correctly and in a timely manner.

Our VAT team which consists of experienced VAT specialists can assist and quite you through this complex procedure and insure that all obligations in this area are met in the most cost-efficient way:


  • Specific transactions VAT treatment
  • VAT reviews to recognise areas of deficiencies and identify risks
  • Tax planning advise to optimize the overall Vat tax burden


  • VAT Registration
  • Preparation, review and submission of VAT returns
  • Maintenance of accurate and proper VAT records
  • Representations with tax authorities on VAT matters



George Pitziolis


Yiannis Athanasiou

Tax Insider 2019

Dear friend,

GP AuditWorld Ltd is an international audit, tax planning, corporate service and business
consulting firm with specialized qualified accountants and auditors from universities in the US,
Greece, and the UK, with keen knowledge and practical experience in their specializations
providing audit, comprehensive tax, corporate and business consulting services to foreign and
local businesses or individuals investing in Cyprus or internationally.
Our broad client base, coupled with our many years’ cumulative experience has allowed our firm
to nurture the specialized professional expertise critical to success, which encompasses a
dedicated client focus and a unique understanding of Cypriot and international business
practices. Above all, our clients are assured of a high level of professional service and focused
attention to their Cypriot business and investment needs.
Investors in today’s complex economic, legal and tax environment, require their advisors to
possess broad-based consulting skills, as well as hands-on experience and knowledge of all
relevant aspects of tax, accounting and operational issues. GP Auditworld’s unique approach to
problem solving employs multivariate analysis to business problems and opportunities, enabling
us to develop creative alternatives and sound recommendations towards achievement of our
clients’ goals.
The publication of Tax Insider 2019 is part of our effort to continuously update our clients and
friends for any changes in key tax issues in Cyprus. Tax Insider 2019 presents information of
general nature which is not intended to address the circumstances of any individual or entity.
You should not act on such information without appropriate professional advice after a thorough
examination of the situation. If you have any questions or concerns regarding your Cypriot
investments or with the information provided with the Tax Insider 2019, please contact us at
your convenience to discuss them.
Best Regards

George Pitziolis



Personal Income Tax

Individuals who spend more than 183 days in one calendar year in Cyprus are consider tax
residents of Cyprus. Days in and out of Cyprus are calculated as indicated below:

  • The day of an individual arrives in Cyprus counts as a day of residence in Cyprus
  • The day of an individual departures outside of Cyprus counts as a day of residence
    outside Cyprus
  • If an individual arrives and departs Cyprus in the same day counts as one day of
    residence in Cyprus
  • If an individual departs and arrives Cyprus in the same day counts as one day of
    residence outside Cyprus.

In a case where foreign taxes are paid by an individual and the same individual is Cyprus
Tax resident under the residency test then credit can be claimed against the personal tax
liability in Cyprus.

Personal tax rates

The effective tax rates for the year 2019 are;

Tax Rate
Tax Amount
Commulative Tax
0-19,5000 0 - -
19,501-28,000 20 1.700 1.700
28,001-36,300 25 2.075 3.775
36,301-60,000 30 7.110 10.885
Over 60,000 35

In cases of foreign pension income is taxed at the flat rate of 5%. An annual exception of
€3,420 is granted. The taxpayer in this category is allowed to elect to be taxed at the
normal tax rates as showed above. The choice can be made from year to year according
to the taxpayer’s choice.

Special Contribution

Special Contribution for a period of three years (1/1/2014-31/12/2016)

A special contribution on gross income for the period mentioned above is
imposed pensioners and self-employed individuals and employees (50% of the tax
contributed by the employer) in the private sector. The special contribution tax is
calculated based on the following table.

Cumulative tax
0-1,500 0 -
1,501-2,500* 2.5 25
2,501-3,500 3 55
Over 3,500 3.5
Over 60,000

* There is a minimum amount of special contribution of €10


Tax Exemptions for Individuals are presented in the table below

Dividend Income 100%
Interest Income, except for interest arising from the
ordinary business activities, or it is related directlly to
the ordinary business activities of an individual

Profits from sale of securities as shares, bonds,
debentures etc.


Capital sums accruing to individuals from life
insurance plans (under certain conditions) or approved
provident funds


Foreign Pension


Rent in relation to buildings which there is a
Preservation Order (under certain conditions)


Remuneration from salaried services rendered outside
Cyprus for more than 90 days in a tax year to a non-
Cyprus resident employer or to a foreign pernament
establishment of a Cyprus resident employer


Profits from a pernament establishment abroad (under
certain conditions)


Lump sum received by way of retiring qratuity,
commutation of pension or compensation for deat or


Remuneration from any office or employment of an
individual provided that s/he was not resident of
Cyprus before employment (applicable for 5 years
commencing from the 1st of January following the year
of the employment)

20% of the
remuneration with
a maximum
amount of €8,550

Remuneration from any employment exercised in
Cyprus by an individual who was not a resident of
Cyprus before the commencement of the employment,
exemption applies for a period of 10 years for
employments commencing as of 1 January 2012
provided the the annual remuneration exceeds

50% of the

Tax Deductions

Contributions to trade unions or professional bodies 100%
Special contribution 100%

Deduction for annual life insurance premiums,
Provident funds(under certain conditions), Pensions,
contributions to the General Medical Fund and
contributions to foreign funds (under certain

Up to 1/6 of the
taxable income

Rental Income

20% rental
Income minus
loan interest and
wear and tear

Donation to approved charities (with receipts)


Losses of previous and current five years (in cases of
audited financial statements)


Remuneration from salaried services rendered outside
Cyprus for more than 90 days in a tax year to a non-
Cyprus resident employer or to a foreign pernament
establishment of a Cyprus resident employer


Deduction for expenditure for a building in respect of
which there is in force a Preservation Order as per the
table below


Per m2







Directors and Shareholder’s loans

If a company grants a loan or other financial assistance to its directors or shareholders
up to their 2
nd degree relatives who are physical persons, then the recipient is deemed to
have a monthly benefit of 9% per year calculated on a monthly basis and is assessed
and collected via the PAYE (pay as you earn) system.

Child benefit

Annual Family
Income €
with 1
with 2
with 3
with 4
0-19,500 475 570 1045 1675
19,501-39,000 425 520 995 1525
39,001-49,000 380 380 760 1260
49,001-59,00 0 348 690 1135

* Per child
* Amounts are based on previous year family’s income

For single parent families an allowance is granted based on the family’s annual income

Annual Family Income Monthly Allowance for each
independent student
0-39,000 180
39,000.01- 49,000 160

Preparation of financial statements

From tax year 2006 and after, sole proprietors with annual turnover of more than
€70,000 are obligated to prepare audited financial statements

Corporation Tax

The corporation tax for all companies including Semi Governmental Organizations is

Tax Deduction for companies are presented in the table below.

Employer's contribution on salaries such as social
insurance and approved funds
Expenses for business entertainment 1% of gross
(max €17,086)
Subscriptions and donations to approved charities with
All expenses used for production of income under
centain conditions
Royalty income 80%
Net profit from the disposal of intellectual property
under certain conditions
Amortization of the Cost of Aquizition 20%
Amortization of the development of intagible asset 20%
For the period 2012-2014 accelarated depreciation on
For the period 2012-2014 accelarated depreciation for
plant and machinery
Interest expense incurred for the acquisition after
1.1.12, of the share capital of a subsidiary company
when the participation in the subsidiary is 100%
directly or indirectly.

The term intangible assets refer to copyrights, patents and trademarks

Deductions can not be claimed for expenses and interest of a private motor vehicle


Tax Exceptions for companies are presented in the table below

Income from dividends 100%
Profit from the sale of securities 100%
Under certain conditions profits of a pernament
establishment abroad
Interest income not accruing or closely connected
with the ordinary activities of the company

Tax Incentives

Losses carried forward

Tax loss incurred during a tax year can be set off against future profits for the next five

Group Relief

Tax loss of a company can be set off against the profit of another company which part of
a group and is Cyprus tax resident. Group is defined as follows

  • One company holding the minimum of 75% of the voting shares of the other
    company, or,
  • Both of the companies are at least 75% held by another third party


Companies’ reorganizations are allowable without any tax effect under certain
conditions. Reorganizations include

  • Demergers
  • Partial divisions
  • Mergers
  • Transfer of assets
  • Exchange shares

Annual wear and tear allowances on tangible fixed assets

Plant and machinery 10.00%
Furniture and fittings 10.00%
Industrial carpet 10.00%
Boreholes 10.00%
Machinery and tools used in agricultural business 15.00%
Buildings %
Commercial buildings 3.00%
Industrial agricultural and hotel buildings 4.00%
Flats 3.00%
Metallic greenhouse structures 10.00%
Wooden greenhouse structure 33.33%
Vehicles and Means of Trasportation %
Commercial motor vechicles 20.00%
Motor Cycles 20.00%
Excavators, tractors,bulldozers,self-propelled loaders
and drums for petrol companies
Armoured Motor Vechicles 20.00%
Speciallised Machinery for the laying or Railroads 20.00%
New Airplanes 8.00%
New Helicopters 8.00%
Sailing vessels 4.50%
Motor Yachts 6.00%
Steamers,tugs and fishing boats 6.00%
Shipmotor launchers 12.50%
New cargo vessels 8.00%
New passenger vessels 6.00%
Used cargo/passenger vessels Over their useful
Other %
Televisions and videos 10.00%
Computer hardware and operating systems 20.00%
Application Software 33.33%
Expenditure on application software less than €1,709
is written off in the year of acquisition
Wind Pawer Generators 10.00%
Photovoltaic Systems 10.00%
Tools in general 33.33%
Videotapes property of video clubs 50.00%

Social Insurance


Employer's contributions 8.30%
Employee contributions 8.30%
Self-employed contributions 15.60%

Contributions to social insurance are restricted to the maximum level of annual income
as listed below

Per annum €
Weekly employees 1,051 54,648
Monthly employees 4,554

Other Employers Contributions are listed in the table below

Employer's contribution
Social Cohesion Fund 2,00%
Redundancy Fund 1,20%
Industrial Training Fund 0,50%
Annual Leave Fund 8,00%


Capital Gains Tax

Any gain arising after the deduction of sales proceeds, of the value of the property at
1.1.1980 or the cost of acquisition after 1.1.1980 adjusted to account for inflation is taxed
at a flat rate of 20%. Lifetime exceptions are listed in the table below.

Gain up to €
Any disposal 17.086
Disposal of Agricultural land 25.629
Disposal of private residence 85.430

It is important to note that gains accruing from disposal of property held outside the
Republic are exempted from capital gains tax.

Land Transfer Fees

Land transfer tax rates are listed below

Value Tax Rate % Transfer fees € Cumulative €
Up to €85,000 3 2.550 2550
85,001-170,000 5 4.250 6800
Over 170,000 8

Immovable Property Tax

Property owners whose total property is less than €12,500 are exempt from paying
property tax. If the value of the property at 1.1.1980 is more than the exempt amount
mentioned above the property tax can be calculated based on the following table

Value of property
1,1,1980 €
Rate % Cumulative €
Up to 40,000 0,6% (min € 75) 240
40,001-120,000 0,8 880
120,001-170,000 0,9 1330
170,001-300,000 1,1 2760
300,001-500,000 1,3 5360
500,001-800,000 1,5 9860
800,001-3,000,000 1,7 47260
Over 3,000,000 1,9

Special Contribution to the Defense Fund

Type of Income Rates
Interest Income 30,00%
Interest Income Received by Provident Funds 3,00%
Rental Income Minus 25% 3,00%
Foreign Dividend Income (Certain Conditions) 17,00%
For individuals only Rates
Interest from Government Development Bonds 3,00%
Interest with Income Less Than €12,000 3,00%
Dividends Received by Individuals Residents of the Republic 17,00%

Important Tax Dates

  • 31/1- Submission of declaration of deemed dividend distribution (TD623) for the year ended 2016.
  • 31/3- Electronic submission of 2017 corporate tax return (TD4) for accounting periods ending on 31 December 2017 (TD4).

Electronic submission of the 2017 income tax return of physical persons preparing audited financial statements.

  • 30/4- Payment of premium tax for life insurance companies – first instalment for 2019.
  • 30/6- Payment of special contribution for defence for the first six months of 2019 on rents if such ta is not withheld at source by tenant and on dividends or interest from sources outside Cyprus.

Payment of 2018personal income tax under the self-assessment method by self-employed individuals not preparing audited financial statements.

  • 31/7- Electronic submission by employers of the total 2018 payroll (Form TD7).

Submission of the 2019 provisional income tax return and payment of the first instalment.
Electronic submission of 2018 person income tax returns and payment of 2018 personal income tax under the self-assessment of/by employees and pensioners, whose incomes do not include income from a trade/business, rents, dividends, interest, royalties nor income relating to trading goodwill.

  • 1/8- Payment of 2018 final corporation tax under the self-assessment method.

Payment of 2018 personal income tax under the self-assessment method by self-employed individuals preparing audited financial statements.

  • 31/8- Payment of premium tax for life insurance companies – second instalment for 2019.
  • 30/9- Electronic submission of 2018 personal ta returns of self-employed individuals not required to prepare audited financial statements.
  • 31/12- Payment of provisional tax – second and last instalment for 2019.

Payment of special contribution for defence for the last six months of 2019 on rents if such tax is not withheld at source by tenant and on dividends or interest from sources outside Cyprus.
Payment of premium tax for life insurance companies – third and last instalment for 2019.
At the end of each following month the following are due:

  • Payment of income tax deducted from employee’s salary (PAYE)
  • Payment of Special Contribution for Defense withheld on payments of dividends, interest and rents made by companies, partnerships, the State or local authorities, made by Cypriot tax residents.
  • Payment of tax withheld on payments to non-Cypriot tax residents.

In case that the above deadlines are not med, then an annual interest of 4% is charged as well as a penalty depending on the circumstances.
Value Added Tax (VAT)
The Vat tax rates are listed below

Standard VAT Rate (up to February 29 2012) 15,00%
Standard VAT Rate (from 1 March 2013 to 13 January 2013) 17,00%
Standard VAT Rate (from 14 January 2013 to 12 January 2014) 18,00%
Standard VAT Rate (from 13 January 2014 onwards) 19,00%
Reduced VAT Rate (Restaurant, Catering, etc) 8,00%
Reduced VAT Rate (Restaurant, Catering, etc) from 13 January 2014 onwards 9,00%
Reduced VAT Rate (Foodstuffs, Medice, etc) 5,00%
Sale or Construction of New Residential Properties 5,00%
Zero Rate (Export of Goods, Leasing of Aircraft and Vessels) 0,00%

Special VAT reliefs on the importation of certain categories of aircraft and a new scheme covering the lease of pleasure boats in Cyprus
VAT registration threshold

Cases Registration Threshold
Supply of goods and services within the Republic 15,600

Supply of goods and services to persons established in other

member states where they do not hold a valid VAT number


Supply of goods and services to persons established in other

member states where they hold a valid VAT number


Services from non Cypriot suppliers and holding companies if

their involved in economic activities


Goods in the Republic from other Member States by individuals

or organizations involved with exempt activities (educational istitutions and hospitals)


Distance sales from person established in other Member State to

individuals or non-VAT registered persons within the Republic


The registration with the Cyprus VAT creates liabilities depending on the circumstances as follows

  • Submission of VAT return per month or per quarter
  • Issue of VAT invoices to VAT registered persons or organizations with the right to claim input VAT
  • Issue of legal receipts to individuals or non-VAT registered persons for the taxable supply of goods or services or the provisional services with affect from 16 January 2012
  • VIES statement every month for dispatches of goods with destination to other Member States
  • Intrastat statements for dispatches every month for goods to other Member States provided that the other party has a valid VAT number. For the year 2014 the registration threshold is €55,000
  • Intrastat statement for arrivals every month for purchasing of goods from other Member States provided that the other party has a valid VAT number. For the year 2014 the registration threshold is €100,000
  • Within 60 days from the termination of trading operation deregistration from the Cyprus VAT Register is required.

The following penalties for non-compliance with the Cyprus VAT regulation are in place

  • Failure to registered with the Cyprus VAT €85 per month
  • Delayed of the VAT return €51 per vat return
  • Delayed of payment of output VAT €10% one-off penalty and 4.5% annual interest
  • Delayed of registration with the VIES system €50 per VIES Statement, of VIES Statement €50 per statement, of correction of VIES statements €15 per statement and delayed of submit VIES statements which is also a criminal offence €850 per statement.
  • Delayed of registration with the INTRASTAT declarations €15 per INTRASTAT Return, of submission of INTRASTAT declarations €15 per INTRASTAT Return, of correction of INTRASTAT declaration €15 per return, failure to submit INTRASTAT returns is a criminal offence and delayed of deregistration from the Cyprus VAT Register €85 one-off penalty.