Payroll in Cyprus

Payroll administration in Cyprus

The Cypriot tax legislation is very specific about the taxation of income and also covers the taxation of employees. Employees are required to pay the personal income tax resulting from their salaries, but will also be withheld certain amounts of money for the social security benefits and pension funds. Companies also must register with the tax authorities in order to be allowed to collect employment taxes. However, payroll administration takes up a lot of time which is why it is best to request the services of professionals who can deal with both HR and payroll management. Our lawyers in Cyprus offer customized payroll administration services that also comply with all EU regulations. Among these:

• registration of Cypriot companies as employers,
• preparing tax returns,
• advising on employment regulations,
• advising with respect to employing foreign workers in Cyprus,
• drafting employment contracts,
• advising on how to establish companies’ provident fund.

For information about how to set up the provident fund, you may refer to our Cypriot lawyers. For similar payroll services in another country, for example in the Netherlands, the team at Dutch-Accountants.com can assist you. They can offer tailored payroll services that start directly with the registration of the company and employees with all relevant authorities.

Paying social securities in Cyprus

All employees are required to pay social security premiums when working in Cyprus. Companies are required to withheld social security taxes and deposit them with the Department of Social Insurance. Social security benefits in Cyprus are comprised of the following:

• social insurance,
• contributions to pension funds,
• contributions for unemployment,
• social contributions for injuries at the workplace.

The tax rates applied to salaries depend on the amount earned and on the status of the employee. Employees are required to pay different tax rates compared to sole traders in Cyprus. Self-employed individuals are not required to pay contributions for unemployment and injuries.

Contributions tax rates in Cyprus

Individuals working in Cypriot companies will be withheld 8.8% social insurance and 2.65% GESY of the gross salary. Both employee and employer contribute 8.8% (2026 ceiling EUR 68,904 a year), with a further State contribution; GESY adds 2.65% (employee) and 2.90% (employer). Social securities are capped to a maximum amount which decided on a year-to-year basis.

Sole traders are required to register for the social insurance scheme and pay their social security contributions every three months. Their contributions amount to 16.6% of their insurable income paid by the individual (plus 4% GESY) and a further State contribution.

For complete information about registration for taxation purposes you may contact our law firm in Cyprus.