Payroll in Cyprus
What tax considerations are there?
Personal Income Tax (PIT)
Residents of Cyprus are taxed on their total worldwide income, whereas non-residents are taxed only on income derived from within Cyprus. Income tax is charged at a progressive rate; those earning less than €19,500 annually are exempt, then the brackets are as follows:
- €19,501 – €28,000 = 20%
- €28,001 – €36,300 = 25%
- €36,301 – €60,000 = 30%
- €60,001 + = 35%
Corporate Income Tax (CIT)
The standard CIT rate in Cyprus is 12.5% and, as with PIT, this applies to the total worldwide income for resident companies, and Cypriot-derived income for foreign companies.
All companies need to be registered online and submit their annual tax return electronically. Tax must be paid provisionally for the current year’s projected income. This should be paid in two equal instalments, on 31st July and 31st December every year. In the event that more tax is owed than what has been paid provisionally, the remainder is owed by 1st August of the following year.
Tax is paid according to self-assessment. The Cyprus Tax Authority has six years to raise an enquiry if necessary, or 12 years in the event of fraud or wilful deceit.
HR in Cyprus
What are the regular working hours in Cyprus?
Most employees in Cyprus work a five day week totalling no more than 48 hours – including overtime. Office hours tend to be between 8am and 6pm between September and May, and between 8am and 7pm from June to September. Shops have varying hours depending on location and time of year, with festival periods seeing reduced hours.
Vacation, maternity and sickness
There are 15 public holidays in Cyprus on which employees are not expected to work. In addition to this, full time employees are entitled to 20 days of annual leave per year, or 24 days of annual leave if they work a six day week.
Pregnant employees are entitled to 18 consecutive weeks of maternity leave, 11 of which are compulsory. These 11 must start two weeks before the expected due date. In the event of multiple births, maternity leave is extended by four weeks per child. A woman must provide a medical certificate detailing the expected due date. Maternity leave pay is paid for by the state under the Social Insurance Law, as long as sufficient contributions have been made and additional conditions are met.
If an employee is off sick for more than three days, they must provide a doctor’s note in order to qualify for payment. For anything less than this, payment is not mandatory – rather it’s at the company’s discretion. For longer periods of sickness, sick pay is provided by the state. An employer is permitted to dismiss an employee who has been off sick for more than 26 weeks.
Should an employee or employer wish to end the contract, appropriate notice must be provided. None is required for the first six months, then one week must be given if the contract has been in effect for between six months and one year. Notice periods then grow progressively, up to eight weeks for those who have worked for more than six years.
When an employee wishes to end a contract a severance pay is due – apart from in the event of unlawful activity. This starts at two week’s wages for every year of service if the employee has worked for up to four years, and increases progressively up to four week’s wages for every year of service if they have worked more than 20 years.