Taxes in Cyprus

Cyprus has been steadily increasing its presence in the news lately due to the economic downshift that the country has suffered. For a short while it seemed that the possibility of removing Cyprus from the Eurozone had disappeared.
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However, more recently those in positions of authority have brought back an idea established in 2011 that estimated what type of an impact Cyprus would experience if it were to exit the Eurozone.

Taxes in Cyprus 2015It is everyone’s hope that such an idea would never need to be implemented and things do in fact seem to be looking up for the country’s economy. It is projected that in 2015 Cyprus will experience a 1.2% growth rate. Coupled with this the country is located to two of the fastest growing economies in the world, Spain and Portugal. With all of these questions and concerns being raised over Cyprus’s economy many find themselves wondering what the tax rates will be in 2015 for both individuals and corporations. It is important to recognize though that taxes differ between

Personal income tax is a necessity in Cyprus, as it is in many countries. Like many of its neighboring countries Cyprus bases individual taxes for tax residents on accrued income, this income may be earned in Cyprus or abroad. An individual is a tax resident if they spend 183 days or more in Cyprus during a calendar year. If an individual is not a taxable resident they are taxed on certain income accrued only from sources within Cyprus.

For the first 19.500 euros earned an individual’s tax rate for 2015 is Nil or nothing; however, at 19.501 an individual will begin being taxed. Tax brackets are broken into five categories, they are as follows: 19.501 – 28.000, 28.001 – 36.3000, 36.301 – 60.000, and anything over 60.000. An individual’s tax rate is based on which of these five categories they fall into. As mentioned above if an individual is in the first category their rate is Nil, second 20%, third 25%, fourth 30%, fifth 35%. Individual’s who are earning a foreign-based pension are taxed at a flat rate of 5% for 2015. They do have the option to be taxed at Cyprus’ normal rates, however.

Tax deductions and exemptions for 2015 are plentiful and similar to every other calendar year. Of course, these are done on a case-by-case basis depending on an individual’s particular circumstances.

Similarly to individual’s corporations are taxed based on their accrued income from all sources, no matter the location if the corporation is a tax resident company. A corporation is considered a tax resident if it is both controlled and managed in Cyprus. A non-resident corporation is taxed based on income earned within Cyprus. The corporation tax rate for all companies in the country is 12,5% for 2015. Corporations may file for deductions on a case-by-case basis, mainly in regards to company expenses.

With a projected enhanced growth rate and growing countries all around, Cyprus is sure to make 2015 a great economic year.