Cypriot residents are taxed on their worldwide income.
Taxable income is taxed at progressive rates. The rates range from 20% to 35% on taxable income. As an austerity measure, a special contribution of between 2.5% and 3.5% is payable on gross earnings for the years 2012 and 2013 above 2,500 Euros.
There is no tax payable on dividend and interest income sourced in Cyprus. Instead, every Cypriot resident pays a 'special defence contribution' on certain types of unearned income.
Income from rental property forms part of taxable income with a deduction for the first 20% of rental income. The remaining 80% is added to taxable income and taxed at the highest marginal rate. Rental income is also subject to the 'special defence contribution' at a rate of 3%.
There are no wealth taxes in Cyprus.
Capital Gains Tax is imposed at the rate of 20% on gains from the disposal of immovable property situated in Cyprus, including gains from shares in companies that invest in immovable property.
There is no Inheritance or Gift Tax in Cyprus.
There is a transfer tax payable. Progressive rates are applied to all transfers.
The standard rate of VAT was increased from 15% to 17% in March 2012 and then increased to 18% on 14 January 2013. As from 13 January 2014 the standard VAT rate will increase again to 19%.
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