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Guide 2024
Find everything you need for confident contracting and working in Cyprus: labour law, taxation, employment compliance, payroll, benefits, and more.
Cyprus
Cyprus is not only a popular tourist destination but also a favored location for foreign investors and international companies seeking an ideal base to conduct business with partners in Europe and the Middle East. Additionally, the island is a preferred spot for digital nomads and relocators who benefit from various tax incentives and a relatively straightforward process for obtaining residency permits. Recently, highly skilled foreign workers have the opportunity to acquire Cypriot citizenship after residing in Cyprus for a shorter period of 4 to 5 years, depending on their proficiency in the Greek language.
Entry Visa
Citizens of EU/EFTA Member States can enter Cyprus with an identity card or a valid passport.
Work Permit / Residence Permit
Citizens of EU and EFTA Member States are able to live and work without a residence permit (initially – see local registration – residence certificate), or work permit in Cyprus.
Residence Certificate
Citizens of EU and EFTA Member States are free to reside in Cyprus for a stay of up to three months. After this period they are required to register with the immigration department to obtain a Residence Certificate (yellow slip). We can assist in attending residency application meetings as/when required.
Any non-EU national who wants to live and work in Cyprus has to obtain a Cyprus work permit.
Taxation in Cyprus
The contractor/worker will have to register for income tax and social security purposes with the relevant authorities in Cyprus. We can assist the contractor/worker with all the registrations required.
The tax year runs from January to December.
Tax Rates
The following progressive rates apply for 2024:
| Taxable Income (EUR) | Rate % |
| Up to 19,500 | 0% |
| 19,501-28,000 | 20% |
| 28,001-36,300 | 25% |
| 36,301-60,000 | 30% |
| 60,001 and over | 35% |
Special Allowance for Expatriates
Scheme 1:
An individual whose residence was outside Cyprus before the commencement of employment and taking up employment in Cyprus for the first time will get an income deduction of 20% of employment income (with a maximum €8,550) annually for five years, commencing from the 1st of January of the next year.
Conditions:
- 1st employment in Cyprus
- Not a Cyprus tax resident upon the commencement of the employment.
Scheme 2:
A 50% employment income deduction applies to non-resident individuals, who take up a residence in Cyprus to work for an employer in Cyprus. The exemption applies for a period of 17 years starting from the first year of employment, provided that the annual income of the employee exceeds EUR 55,000 per annum.
Conditions:
- 1st employment in Cyprus
- Not a Cyprus tax resident for 3 out of 5 years preceding the year of commencement of employment;
- Not a Cyprus tax resident in the year preceding the year of commencement of employment.
Tax Returns
Employees are required to file (electronically) an annual tax return by 31st July of the year following the tax year. We can assist with this.
Double Taxation Agreements
Cyprus has signed Double Taxation Agreements (DTAs) with numerous countries. The Double Taxation Agreement between Cyprus and the home country of the contractor serves to avoid double taxation in Cyprus and the contractor’s home country.
Social Security
Social Security is obligatory for all employed contractors working in Cyprus. The employee’s contribution is withheld from the gross salary and is deductible for tax purposes (i.e. qualifies for tax relief).
In 2024 the rates of social security contributions for employed persons are:
| Type of Insurance | Employer % | Employee % |
| Social Insurance Fund | 8.8% | 8.8% |
| Redundancy Fund | 1.2% | – |
| Training Development Fund | 0.5% | – |
| Social Cohesion | 2.00% | – |
| Government Medical Scheme | 2.90% | 2.65% |
| Total % | 14,90% | 10,95% |
The maximum monthly insurable earnings for the year 2024 for social security contribution is EUR 5,239. The only exception is the Social Cohesion, where the maximum monthly insurable earning of EUR 5,239 does not apply, and the calculation is made on the actual monthly income.
It is mandatory for all new and existing employed contractors working and contributing to social security in Cyprus to contribute to the Government Medical Scheme (GESI). The GESI rate of contribution for employers is 2.90% and for employees is 2.65%. To calculate the GESI contributions, the gross annual income is limited to EUR 180,000.
Pension
This is already covered through the Social Security contributions (8.8% for the employer and 8.8% of the employee).
Holiday Pay
21 days per calendar year is the minimum for a normal employment of 8 hours per day, 5 days per week, 52 weeks per year. For part-time employees, it is proportionated. If someone works for 4 hours per day, they are eligible for 10.5 days etc.
Public Holidays
- 01 January (New Year’s Day)
- 06 January (Epiphany)
- Green Monday (not a standard date, usually during March)
- 25 March (Independence Day)
- 01 April (national day)
- Good Friday (not a standard date)
- Easter Monday (not a standard date, usually during April) 01 May (labour day)
- Pentecost Monday (not a standard date, usually during June)
- 15 August (Assumption Day)
- 01 October (Independence Day)
- 28 October (Greek national day)
- 25 December (Christmas)
- 26 December (boxing day)
Sickness
No sickness pay is obligated to be provided by the employer – sick pay is claimed, when applicable from the Social Security Department. However, the common practice is for the Employer to cover 3 sick days per calendar year.
Transition Compensation (Severance Pay)
| Period of continuous employment | Amount of redundancy payment |
| Up to 4 years | 2 weeks wages for each continuous period of employment of 52 weeks |
| Above 4 and until 10 years | 2 ½ weeks wages for each continuous period of employment of 52 weeks |
| Above 10 and until 15 years | 3 weeks wages for each continuous period of employment of 52 weeks |
| Above 15 and until 20 years | 3 ½ weeks wages for each continuous period of employment of 52 weeks |
| Above 20 and until 25 years | 4 weeks wages for each continuous period of employment of 52 weeks |
Maternity / Paternity and Other Statutory Leave
Paternity: 14 consecutive days. The duration of paternity leave must fall within 16 weeks from the day of birth.
Maternity: 18 weeks starting between the 9th and 2nd weeks before the week of the expected birth. The common practice is to start 2 weeks before the estimated birth date.
Notice Period
Employer
| Period of continuous employment | Minimum period of notice |
| Up to 25 weeks | No notice |
| From 26 to 51 weeks | 1 week |
| From 52 to 103 weeks | 2 weeks |
| From 104 to 155 weeks | 4 weeks |
| From 156 to 207 weeks | 5 weeks |
| From 208 to 259 weeks | 6 weeks |
| From 260 to 311 weeks | 7 weeks |
| From 312 and over | 8 weeks |
Employee
| Period of continuous employment | Minimum period of notice |
| Up to 25 weeks | No notice |
| From 26 to 51 weeks | 1 week |
| From 52 to 259 weeks | 2 weeks |
| From 260 and over | 3 weeks |
How We Can Help
AFSS (PEO CY) Ltd is registered as a “Foreign Interest Company” in Cyprus, which enables us to provide the following services:
- Provision of Employer of Record (EOR) services in Cyprus
- Assistance in obtaining work permits/digital nomad visas (fast-track)
- Limited Company Solution
For more information on how we can help you and your business, or to set up a meeting contact us at [email protected] or by tel: +357 25 820 640
Disclaimer
We have prepared this as a guide only; it does not form part of an offer. Please request illustrations based on your specific case from one of our solution managers.
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