Working in Cyprus

The Republic of Cyprus has not adopted a transitional agreement, and thus the principle of the freedom of movement of workers between EU countries is applicable in full in Cyprus. Under the Freedom of Movement and Residence of Nationals of the Member States of the European Union and of their Family Members Law of 2003, nationals of other Member States seeking permanent employment in Cyprus must take steps to obtain a residence permit within three months of entering the Republic (except where their employment is seasonal). An application should be submitted to the Population and Migration Archive. Persons who are receiving unemployment benefit in the country from which they come must bring an E303 certificate with them.

Residence & work permits

Cyprus residence permit
Provided the applicant has satisfactory financial standing, and a clean criminal record there should be no hindrance to obtaining a residence permit after applying to the Ministry of Interior. By law, a non-Cypriot in Cyprus is entitled to a temporary residence permit, but is not required to hold a permanent residence permit. However this is easy to obtain once the following criteria have been fulfilled. An application must be provided to prove that you and your family are self-supporting. Pafilia Property Developers can recommend relevant professionals to assist with these matters.

Work permit - working in Cyprus
Provided you hold EU citizenship, when you have been offered and accepted employment in Cyprus, your employer must apply for a work permit for you. Since the EU membership of Cyprus, EU citizens have the freedom to work and open their own businesses in Cyprus. The immigration office in Pafos is responsible for dealing with work permits, visas, pink slips and any other permits required.

Obtaining an identity card
� Step 1: Migration Department (Tel: + 357 22 804 400). Go to the Migration Department and fill in the relevant form. You will need passport photos and �5 to obtain your alien book (ARC) and residence permit (pink slip). The ARC and residence permit will take a little while to process. In the meantime, payment receipt will be given.
� Step 2: Present your residence permit and ARC together with your birth certificate and passport. You have to be in Cyprus for more than 6 months to qualify for an identity card.

Obtaining a work permit
� Step 1: See 'To Obtain an identity card' above.
� Step 2: Ministry of Labour (Tel: 22 804 414). Go to the Ministry of Labour and request application forms for a work permit.
� Step 3: Go back to the Migration Department with your ARC and have the forms submitted from the Migration Department. For EU citizens, a work permit is given without question for up to 5 years.

Temporary & permanent residence

Now that Cyprus has joined the EU, the restrictions, which formerly applied to citizens of the European Economic Area as regards employment and residence in Cyprus have been abolished. European citizens who wish to reside in Cyprus are required to register for that purpose with the Department of the Population and Migration Archive or with an office of the Aliens and Migration Service of the police.

EU citizens who work and reside legally in Cyprus have the same rights as citizens of Cyprus as regards remuneration, working conditions, residence, social insurance, and trade union membership etc. Dependants of European citizens have the same rights. The foregoing applies also to all citizens of the European Economic Area (which consists of the countries of the European Union plus Iceland, Liechtenstein, Norway and Switzerland.

Social security agreement - Cyprus & UK

The UK has a social security agreement with Cyprus. The agreement means that you will be treated in the same way as Cypriot nationals, and that you will be able to keep rights to some of the benefits that are based on the insurance you have paid. When you move to Cyprus, you should let your social security office and the Inland Revenue Centre for Non Residents know, and give them your new address:
Inland Revenue| Centre for Non Residents
Room BP1301 | Benton Park View
Newcastle-upon-Tyne
NE98 1ZZ
United Kingdom.

Remember to inform the social security office and the Inland Revenue for Non Residents when you return to the UK, or any benefit you claim might be affected. More information can be found on the Department of Work and Pensions website www.dwp.gov.uk. The Department for Work and Pensions also have a comprehensive guide (SA12) to the Social Security Agreement between the UK and Cyprus that can be downloaded from their website.

Setting up a business in Cyprus

In most cases you have to register your business in the trade register of the Chamber of Commerce. You will be asked for information on the legal form and the trading name of your company. If you register your business in the trade register of the Chamber of Commerce, a general search will be done to check if there is already a business with that name. Your trade name is protected from the date that your company is operative and becomes known to third parties.

VAT: Most businesses are required to charge VAT. The Inland Revenue will provide a VAT registration number.

Cypriot income tax

� The tax system in Cyprus is progressive, so the higher your income, the higher the rate at which you will pay tax.
� The tax rates for an individual are currently 20-30%.
� There is a reduced rate and/or exemptions that are granted for certain forms of income.
� The standard rate of corporation tax is 10%. When the profit is above �1,708,601.44 (CYP 1,000,000) the tax rate on the balance is 15%.
� The profits of off shore companies registered in Cyprus before 12/2001 are charged a final tax of 4.25%

Personal income tax
An individual is liable for tax on his income as an employee and on income as a self-employed person. Tax will be payable on income earned in Cyprus and overseas but excepting a salary received overseas by an individual who meets the test of a "permanent resident" of Cyprus. A foreign resident who is employed in Cyprus pays tax only on income earned in Cyprus.
� To be considered a resident of Cyprus, residence of at least 183 days in Cyprus during any calendar tax year must be established or a life that is centred in Cyprus.
� An employer is obliged to deduct immediately, each month, the amount of tax and national insurance due from a salaried worker.
� A self-employed individual is obligated to make advance payments on income tax that will be offset on filing an annual report. The advance payments are made in three equal payments.
� Certain payments are deductible from taxable income as detailed below:

Tax (%) Tax Base (�) Tax Base (CYP)
0 Up to 17,086.01 Up to 10,000
20 From 17,087.72 - 25,629.02 From 10,001 - 15,000
25 From 25,630.73 - 34,172.03 From 15,001 - 20,000
30 34,173.74 + 20,001 +

The tax year in Cyprus is the year ending on December 31st.
Advance payments of income tax are made as specified below:

An Individual
An individual whose income is only from a wage is not obligated to file an annual return. The employer deducts tax from the employee and transfers it to the Tax Authority every month. A self-employed individual must file an estimated return by August 1st and three equal advance payments must be made according to the estimated return on August 1st, September 30th and December 31st. The return must be filed by April 30th.

A Limited Company
The principles for the tax return and advance payments are similar to those for an individual. The tax payable must be paid by August 1st, in the following tax year. Arrears in the Payment of Tax entail annual interest of 5% for payment up to 6 months from the date determined for payment or 9% if the arrears are in excess of 6 months.

Taxation of an employee
The employer is obligated to deduct tax at source from an employee and to make additional contributions to social security.

Social security
The employer and employee are required to make equal contributions of 6.3% of the salary. The maximum amount on which national insurance is payable is �3,147.24 (CYP 1842) per month. Income in excess of the maximum is exempt from national insurance.