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Summary
Cyprus uses a PAYE-style system where employers withhold income tax and social contributions from each payslip. Income tax is progressive with five brackets from 0% to 35%, with a generous tax-free allowance of EUR 19,500. Employees pay social insurance contributions (8.8% of gross salary, capped) and a GESY (national health system) contribution of 2.65%. Cyprus has no municipal or local income taxes.
How it works
Your take-home pay is your gross salary minus three main categories of deduction:
- Social insurance contributions — 8.8% of gross salary up to a maximum insurable earnings cap
- GESY (General Healthcare System) contribution — 2.65% of gross salary up to a separate cap
- Income tax — progressive rates applied to total gross income (social contributions are not deducted from taxable income)
The employer additionally pays social insurance (8.8%), GESY (2.90%), and other levies, but these are not deducted from the employee’s salary.
Income Tax Bands (2025)
Cyprus’s income tax uses five marginal brackets:
| Taxable income | Marginal rate |
|---|---|
| Up to EUR 19,500 | 0% |
| EUR 19,501 — EUR 28,000 | 20% |
| EUR 28,001 — EUR 36,300 | 25% |
| EUR 36,301 — EUR 60,000 | 30% |
| Above EUR 60,000 | 35% |
The EUR 19,500 tax-free threshold is one of the most generous in the EU. There is no separate personal allowance — the 0% bracket serves as the tax-free amount.
Social Security Contributions
Employee contributions (deducted from gross salary)
| Component | Rate | Annual cap |
|---|---|---|
| Social insurance | 8.80% | EUR 66,612 |
| GESY (national health system) | 2.65% | EUR 180,000 |
| Total employee contributions | 11.45% | — |
The social insurance cap of EUR 66,612 is based on the maximum insurable earnings set annually by the Social Insurance Fund. The GESY contribution applies to a higher cap of EUR 180,000.
Employer contributions (not deducted from salary)
| Component | Rate |
|---|---|
| Social insurance (employer share) | 8.80% |
| GESY (employer share) | 2.90% |
| Redundancy fund | 1.20% |
| Industrial training fund | 0.50% |
| Social cohesion fund | 2.00% |
Worked Example
For a gross annual salary of EUR 35,000 (single, no dependants):
- Social insurance: EUR 35,000 x 8.80% = EUR 3,080.00 (below EUR 66,612 cap)
- GESY contribution: EUR 35,000 x 2.65% = EUR 927.50 (below EUR 180,000 cap)
- Total employee contributions: EUR 4,007.50
- Income tax (applied to gross salary):
- First EUR 19,500 at 0% = EUR 0
- EUR 19,501 — EUR 28,000 at 20% = EUR 1,700.00
- EUR 28,001 — EUR 35,000 at 25% = EUR 1,750.00
- Total income tax: EUR 3,450.00
- Total deductions: EUR 4,007.50 (contributions) + EUR 3,450.00 (tax) = EUR 7,457.50
- Take-home pay: EUR 35,000 - EUR 7,457.50 = EUR 27,542.50/year (EUR 2,295/month)
Assumptions and Limitations
- 2025 rates only — uses thresholds and rates effective for the 2025 tax year
- Single taxpayer with no dependants — married filing or dependant deductions may reduce tax
- Employment income only — does not model self-employment, investment income, rental income, or Special Defence Contribution (SDC) on dividends/interest
- Tax resident — non-domiciled residents may have different treatment for certain income types
- No pension fund deductions — does not model contributions to approved provident/pension funds which can reduce taxable income
- Gross salary below social insurance cap — the EUR 66,612 annual cap is not reached in the example
- No Special Defence Contribution — SDC (currently 0% on employment income) and GHS contributions on other income types are not modelled