Update: The 2019 Cyprus Tax Return online deadline has been extended to the 15th December 2020

Cyprus tax returns online for 2019 have finally been made available.

Any registered Cyprus taxpayer will receive an email notification requesting completion of the return by the 15th December 2020, together with payment of any balance of tax for the year.

The new returns are gathering significant new data to connect taxpayers’ information, enable improvements for assessing tax returns in Cyprus, and to exchange information cross-border.

All tax offices around the world receive information from tax agents such as property sales agents, rental agents, employers, bank and investment providers. These income statements are then shared across borders to the tax office of the residential address for the individual taxpayer.

Income arising in the UK is shared to Cyprus for any tax resident. Rental income from overseas rentals makes it way back to the UK.

The taxpayer is responsible for reporting on their tax returns for each country. Even if non-resident, there may be a tax return requirement for fixed income arising in a specific jurisdiction e.g. rental income.

HEALTH TAXES

2020 is all about Health. Covid has seen a new level of information gathering and exchange of data to keep the population safe. With income support schemes administered through social insurance and tax offices, new linking of data is achieved. This means full disclosure of income is a core requirement going forward.

In 2019, Cyprus Health Tax was introduced on all worldwide income at a flat rate of 1.7%.

There are exemptions, but only for those with a certified health tax exemption certificate issued by the Cyprus Tax Office.

If you want help getting a Cyprus Health tax Exemption form contact us at ProACT for help.

As a result, the new Cyprus online return for 2019 now requires you to declare new data to link your tax return ID number to your Social Insurance Number and Medical Registration Number. 

Expats with healthcare benefits, social insurance payments or national insurance benefits in other countries are required to declare the country, income and payments details for 2019.

DAYS RESIDENT

For Cyprus Tax Residence you must be on the island for at least 60 days a year. While confirming the days you spent in the country, the new Cyprus Tax Return also requires you declare you are tax resident for the year.

For Expats working abroad from Cyprus, while remaining tax residents, they must declare their worldwide income, which is then subject to any income, social insurance, defence taxes, capital gains and health taxes.

For Expats working abroad from Cyprus but not tax residents, only Cyprus income is declarable and taxable in Cyprus. This allows working Expats to maximise tax efficiency using service companies and by holding trusts for income and capital.

TAX FREE?

In Cyprus, certain lump sum payments or benefit incomes could be free of income taxes. However, they are not necessarily exempt from Health Tax. So all such income for 2019 should be declared in the return.

TAX CALCULATION 

The declaration of each class of income (earned employee, self employed, pension, savings, interest and dividends, rental income) is required and broken down in detail.

Another complexity is that Cyprus Health Tax only applies from 1st March 2019 and relevant income from that date. So the annual income must be further broken down for the respective periods, and adjusted for any self-assessed Health, Income and Defence tax paid in 2019 to determine the balance of tax due to be paid following the return.

Both the Cyprus tax return and balancing payment of 2019 tax are due by 30th October 2020.

In December 2020, the self-assessed income tax for 2020 is due and should include health taxes payable for the period. 

ProACT Know How

For help and guidance with your Cyprus Tax Return 2019 and 2020 contact the Expat experts.