The tax-free allowance in Cyprus has increased almost tenfold in 35 years. From 2,000 (€3,417), which was in 1991, in 2026 rose to €22,000
Over the years, tax scales in Cyprus have varied a total of nine times. Of course, the changes that occurred were in relation to the cost of money, the state of the economy and the developments in the country. For many years, after all, taxes were at low levels, with the aim of attracting foreign investors to Cyprus. Shortly before the country's accession to the European Union, on the one hand the amount of the tax-free allowance increased fivefold and on the other hand additional tax scales were added. "F" presents the changes from 1991 to 2026.
From 1991 to 1995
From 1991 to 1995 the tax-free allowance was up to 2,000 pounds. At the same time, a 20% tax was imposed on incomes from 2,001 to 4,000 which was increased to 30% for incomes from £4,001 to £8,000. Also, the tax was 40% for annual incomes over £8,001.
From 1996 to 1999 the tax-free allowance had increased to 5,000 pounds, while incomes from 5,001 to 8,000 were taxed at 20%. pounds. A 30% tax was levied on incomes from 8,001 to 11,000 pounds and with 40% incomes over 11,000 pounds.
40% tax for more than 12,000 pounds
From 2000 to 2001 the tax-free allowance was further increased to 6 thousand. pounds, while incomes from 6,001 to 9,000 pounds were taxed at 20%. A 30% tax was imposed on incomes from 9,001 to 12,000 and 40% for incomes over 12,000 pounds.
In 2002, the tax-free allowance had risen to 9,000 pounds, while incomes from 9,001 to 12,000 pounds were taxed at 30% and at 40% on incomes over 12,000 pounds. In 2003 the tax-free allowance remained the same and three tax scales were added, which ranged between 20% and 30%.
The changes before the EU
Between 2004 and 2006 the tax-free amounted to 10,000 and incomes between 10,001 and 15,000 were taxed at 20%. A 25% tax was imposed on incomes between 15,001 and 2,000 and 30% for earnings over 20,000 pounds.
In 2007, the tax scales changed again, with the tax-free allowance rising to £10,750. A 20% tax was levied on incomes from £10,751 to £15,750, 25% for incomes up to £20,600 and 30% for earnings over £20,601.
For 17 years the same scales
This was followed by a new change of scales, which remained for 17 years. Specifically, from 2008 to 2025 the tax-free was €19,500. A 20% tax was imposed on incomes from €19,501 to €28,000, with the amount of tax estimated at around €1,700.
Also, incomes between €28,001 and €36,300 were taxed at 25%, with the tax reaching €2,075, while incomes between €36,301 and €60,000 were taxed at 30%, with the amount of tax reaching €7,100. A 35% tax was imposed on incomes over €60,000.
The new data for 2026
With the new tax scales applied from 2026, as part of the tax reform, the tax-free allowance was increased to €22 thousand. Incomes from €22,001 to €32,000 are taxed at 20%, with the amount of tax reaching €2,000. Incomes up to €42,000 are taxed at 25%, with the tax reaching €2,500, while the annual earnings between €42,001 and €72,000 are taxed at 30% (tax €9,000). For earnings over €72,000 taxation amounts to 35%.
A lot changes from next year
From next year, a lot will change in the income declarations of employees and self-employed for the tax year 2026. This is because the tax returns for 2026 will incorporate all the changes brought about by the tax reform, which has been in force since January 1, while at the same time the returns will be submitted in a different way.
That is, the tax scales and the amount of the tax-free allowance will be differentiated, while the tax deductions received by taxpayers due to the composition of their family and their income will also be calculated. At the same time, from next year, tax returns will be submitted through the new Tax For All (TFA) computerized system.
Therefore, this year is the last year in which we submit the tax returns of employees and self-employed through the well-known procedure of the existing TAXISnet system.
The changes and additions
In detail, in the income returns for the tax year 2026, which we will submit next year through the TFA, the following new data will apply:
-It will be mandatory for all natural persons who are residents of the Republic, aged 25 and over, to submit tax returns, regardless of whether they have taxable income or not.
-Until the age of 71, taxpayers will have to submit tax returns [however, if you are due to pay Special Defence Levy once you have been here 17+ years, you need to continue submitting annual returns in addition to the twice yearly Special Defence Levy returns, ie up to 30/6 and 31/12.
– The submission of tax returns for 2026 will begin in April 2027 and will be completed on July 31.
-The tax-free income has increased to €22,000. Taxable income is the net amount taxed after deductions, exemptions, and deductions.
-The tax scales for the tax year 2026 provide for the imposition of a 20% tax on incomes from €22,001 to €32,000, a 25% tax on incomes from €32,001 to €42,000, a 30% tax on annual incomes from €42,001 to €72,000 and a 35% tax on incomes over €72,000.
– The tax deductions received by taxpayers for each child or student are €1,000 for the first child, €1,250 for the second child and €1,500 for more than three children.
– A €2,000 income tax deduction is provided for the interest on a performing mortgage for a main residence and for rents, as well as €1,000 for green investments for a main residence and for the purchase of an electric vehicle. A prerequisite for tax deductions is the amount of the family's annual income, as for 1-2 children the total earnings should be up to €100,000, for 3-4 children the annual incomes should be up to €150,000 and for more than five children, the family's income should be up to €200,000.
What to watch out for this year
This year, the submission of tax returns for the 2025 tax year started with a delay, due to the tax reform. Specifically, the submission of tax returns began on June 18 and will be completed on October 31.
Taxpayers with annual gross incomes of less than €19,500 are obliged to submit a tax return. Tax returns are submitted through the existing TAXISnet system.
At the same time, those who submit the tax returns and pay the required tax by the deadline of October 31 will not be charged with any interest or financial charges.
At the same time, the amount of fines has increased. Late submission of an individual's income statement for 2025 will result in a financial burden of €150. It should be noted that the fine was increased in the context of the tax reform.
However, the interest of taxpayers in submitting tax returns for 2025 is numb, which, as it seems, they will do after the summer holidays.
By the beginning of August, only 20% of taxpayers had submitted their income returns. It is estimated that around 66,500 taxpayers have processed their tax returns. Of these, 54,000 taxpayers have submitted them definitively and 12,500 are in temporary receipt.
