Up to 19,500 0%
From 19,501-28,000 20%
From 28,001-36,300 25%
Over 36,300 30%
Calculation of taxable income of 2010
Exemption (20% of salary or less than € 8,550) 38,000
Total Income -7,600
Minus: Deductions; Donations 30,400
Net Revenue -300
Minus: Personal allowances 30,100
(Limited to 1 / 6 of the net income of € 30,100 * 1 / 6 = € 5,017)
Social Insurance Fund (€ 38.000 * 6,8%) -2,584
Provident Fund -1,710
Life Insurance -723
Taxable Revenue for 2010 25,083
Income tax for the year 2010 (€ 25,083 – € 19,500) * 20% 1,117
Other retentions by the employer
In addition to retentions for income tax purposes, the employer is obliged to withhold the contribution of employees to the Social Insurance Fund and other funds of the state. The contribution of the employee amounts to 6.8% of the salary. The mandatory contributions of the employer amount to 10.5% of earnings, and consist of:
● Social Insurance 6.8%
● Social Cohesion Fund 2%
● Redundancy Fund 1.2%
● Industrial Training Fund 0.5%
For 2010 the above contributions are calculated on a monthly salary of up to € 4,216 with the contribution to Social Cohesion Fund excepted which is imposed on the entire salary without restriction.
➤ Capital Gains Tax
The Capital Gains Tax is levied on profits arising from the disposal of real estate property in Cyprus, or shares of companies which own real estate property in Cyprus, (and whose shares are not listed on any Stock Exchange). Capital Gains Tax is not paid on transfers of property, or shares carried out as part of reorganization of the company.
The tax is levied on the net profit of the sales price on a rate of 20%. The net profit is calculated after deducting the price of the greater cost or the market value of the property on January 1st, 1980, taking into account the subsequent increase inflation.
Gifts to relatives or family companies are not considered as disposals hence are not taxable. The following lifelong exceptions are granted for individuals, (certain restrictions are applicable):
■ Sale of principal residence € 85,430
■ Sale of agricultural land by a farmer € 25,629
■ Other sales € 17,086
➤Immovable Property Tax
The Immovable Property Tax is imposed on the owner (natural and legal persons) on the 1st of January each year. The tax is calculated on the market value of real property on January 1st, 1980 and is payable by 30 of September of each year, with the following rates:
■ For every euro up to € 170.860 zero
■ For every euro of € 170.861 to € 427.150 2,5 per mil
■ For every euro of € 427.151 to € 854.300 3,5 per mil
■ For every euro of € 854.301 and over 4 per mil
➤ Stamp duties
Documents are subject to stamp duty if they relate to any property located in the Republic or issues or matters that will be executed or done in the Republic, regardless of the place of their execution. From paying such charges, transactions under reorganization are exempted. Stamp duty fees are paid as below:
■ 1,5 per mil for amounts up to € 170.860
■ 2 per mil plus € 256 for amounts over € 170.860 to € 17.086 maximum fee
■ With no set amount: € 34
Transactions in the cadres of re-establishment of companies are exempt from the payment of stamp duties.
Payment of the Defence Contribution
Any person who pays dividends or interest, shall retain a Special Defence Contribution and shall submit it to the IRD Director with a form that provides data in regards to its calculation. If the Defence Contribution is not withheld from that person, nothing prevents the director from receiving the contribution from the person that the dividend or interest was collected. The Defence Contribution due to rent, interest and dividends, shall be paid to the IRD by the end of the following month after the rent, interest or dividends payment. As for rent receivable, the protection due to be paid in two half doses, i.e. on June 30 and December 31 each year. If the payable Defence is not paid on the due date, then it is collected by the IRD with an additional 5% interest. Interest is calculated daily, until the payment date.
Four different models for a VAT robust system
The Green Paper presents four different models, mainly to combat fraud and minimize tax losses:
Mode of separate payment:
The payment of the person receiving the services will be devided at the vat input. This amount is transferred directly to the vat department at the actual purchase price, which goes to the provider of the services.
Centralized database of transactions:
All transactions conducted in the EU by taxpayer must be recorded in real time on a centralized database, accessible to the tax authorities
Mandatory standard form for invoicing and accounting (Uniform control file):
The Green Paper stores the uniformed details in a data warehouse, in which the tax authority has direct access and can check the details of taxpayers
Certificate of taxpayers:
Taxpayers, who comply with the procedure described above, get a certificate. All interested parties are invited to submit their responses to the questions asked in this document until May 31st, 2011. It is a unique opportunity for all interested parties to assist in the development of the VAT system in Europe. Ernst & Young is preparing its response to the Green Paper. As part of this process, Ernst & Young sought the views of customers through a questionnaire on the Internet.