How income tax works in Cyprus
Cyprus income tax applies to worldwide income if you are Cyprus tax resident. Nonresidents are taxed only on certain Cyprus-source income. From the 2026 tax year, the tax-free threshold is EUR 22,000 and the top rate remains 35%.
The 2026 bands are EUR 0-22,000 at 0%, EUR 22,001-32,000 at 20%, EUR 32,001-42,000 at 25%, EUR 42,001-72,000 at 30% and over EUR 72,000 at 35%.
Payroll planning matters. Employee and employer social insurance is 8.8% up to the 2026 insurable-earnings cap, and GESY contributions generally apply on salary, self-employment, pensions, rental income and other income categories at the statutory rates.
Income tax brackets in Cyprus
| Bracket | Rate | Notes |
|---|---|---|
| €0 - €22,000 | 0% | New 2026 threshold |
| €22,001 - €32,000 | 20% | Applies only above the threshold |
| €32,001 - €42,000 | 25% | Progressive band |
| €42,001 - €72,000 | 30% | Progressive band |
| Over €72,000 | 35% | Highest marginal rate |
Tax rates at a glance
- Personal income tax
- 0% - 35%Progressive
- Top marginal rate
- 35%
- Tax-free threshold
- €22,000
- Employee social insurance
- 8.8%
- Employer social insurance
- 8.8%
- GESY employee rate
- 2.65%
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
EmployeesContractorsExpatsFoundersHigh earners
Watch out for
- The 60-day residency rules were updated in the 2026 reform, so residence planning now needs a fresh review.
- Dividend income is usually not taxed under PIT, but resident domiciled individuals can still face Special Defence Contribution on dividends.
- Rental income is still relevant for income tax and GESY, even though the 2026 reform removed SDC on rents.
Frequently asked questions
What is the income tax rate in Cyprus?
Cyprus has progressive personal income tax rates from 0% to 35%. From tax year 2026, the first EUR 22,000 of taxable income is taxed at 0%.
Do expats pay Cyprus income tax?
Expats who are Cyprus tax residents are taxed on worldwide income. Nonresidents are taxed only on specified Cyprus-source income.
What payroll taxes apply in Cyprus?
The main payroll costs are social insurance and GESY. For 2026, employee and employer social insurance is 8.8% up to the annual cap, and GESY generally applies at 2.65% on the employee side.