CyprusLiving

Each employee, self-employed, or person operating in the private sector receiving a pension, shall pay a special contribution to the Republic in order to strengthen public finances. The contribution is a percentage levied on the gross earnings as shown in the table below.
Gross monthly salary € Special Contribution %
Up to 2.500 0
2.501 - 3.500 2,5 (with a minimum amount of special contribution of €10)
3.501 - 4.500 3
4.501 and over 3,5

The above special contribution is calculated on the total gross earnings with no restriction or maximum limit on the amount of the levy.

For employees of the private sector, the following are exempt from the special levy:
• Retirement bonus
• Amounts paid by provident funds
• Remuneration of a foreigner who is employed by a foreign government or by an international organization
• Remuneration of foreign diplomats and consular representatives who are not citizens of the Republic
• Remuneration of Cypriot ship’s crew
• Allowances paid to employees covering business expenses on behalf of an employer

Employees or pensioners, who pay the Special Contribution under the Offi cers, Employees and Pensioners of the State and Public Sector Law on their salaries or pensions, are exempt from the above payment.
In the case of an employee, the payment of the special contribution is shared equally by the employer and the employee, (i.e. 50% of the special contribution is paid by the employee and 50% is paid by the employer).
The special contribution paid is deductible from the taxable income of the employee/employer that it relates to.
Imposition and payment of special contribution The imposition and payment of the special contribution will be as follows:

a) In the case of an employee of the private sector and / or person receiving a pension from the private sector the amount of special contribution will be withheld from the wage or pension and will be paid to the Inland Revenue on a monthly basis.

b) In the case of a self-employed, the amount of special contribution will be declared on a form approved by the Director of Inland Revenue and paid in three installments following the same procedure and dates provided for the provisional income tax (i.e. August 1, September 30 and December 31).