How is a foreign pension taxed in Cyprus?

You can elect a flat 5% on the pension income above €5,000 per year (the first €5,000 is tax-free), or the normal progressive rates, whichever is lower, chosen each year.

Do I have to live in Cyprus all year to be tax resident?

No. Under the 60-day rule you can be Cyprus tax resident with as few as 60 days in Cyprus, provided you are not tax resident elsewhere, do not spend more than 183 days in any other single country, and you maintain a permanent home in Cyprus together with a Cyprus tie such as business, employment or an office.

As a non-dom, is my investment income taxed in Cyprus?

Non-domiciled residents are exempt from Special Defence Contribution on dividends and interest for up to 17 years. After that, individuals without a Cyprus domicile of origin can elect to pay a fixed €250,000 to extend the exemption for a further five years (up to two periods). We review your full situation.

Personal Income Tax

Cyprus personal income tax (PIT) is charged on the worldwide income of individuals who are Cyprus tax residents, and on the Cyprus-source income of non-residents. Following the 2026 tax reform, the tax bands were widened and several new rules apply from 1 January 2026. Elsavco advises individuals on their Cyprus income tax position and prepares and files their tax returns.

Income tax bands (from 1 January 2026)

Up to €22,000: 0%
€22,001 – €32,000: 20%
€32,001 – €42,000: 25%
€42,001 – €72,000: 30%
Over €72,000: 35%

(Up to 31 December 2025 the tax-free band was €19,500, with bands of 20% / 25% / 30% / 35%.)

Key exemptions from personal income tax

50% exemption on remuneration from first employment in Cyprus exceeding €55,000 per year, for individuals not resident in Cyprus for 15 consecutive years beforehand - for up to 17 years.
25% exemption on remuneration (up to €25,000 exempt per year) for individuals who take up employment or a business in Cyprus between 2025 and 2030 and who were not Cyprus tax resident for the seven years beforehand but had been Cyprus tax resident at an earlier point i.e. people returning to Cyprus. It applies for seven years and cannot be combined with the 50% exemption.
20% exemption (up to €8,550) for certain first employments, for up to 7 years.
100% exemption for remuneration from employment exercised outside Cyprus for more than 90 days in a tax year for a non-resident employer.
Profits from the disposal of "titles" (shares, bonds and similar) are exempt.
Lump sums on retirement, and payments from approved provident and pension funds, are exempt.

Other income taxed at special rates (from 1 January 2026)

Termination and ex-gratia payments: amounts over €200,000 relating to retirement or termination of employment are taxed at a flat 20%.
Share-based benefits: benefits from share options or rights to acquire shares are taxed at a flat 8% (conditions apply).
Cryptoasset gains: gains from cryptoasset transactions are taxed at a flat 8% income tax (excluding assets acquired through mining).

Foreign pensions

A Cyprus tax resident receiving a pension from abroad can elect to be taxed either at a flat 5% on the amount exceeding €5,000 per year (the first €5,000 is tax-free), or under the normal bands above, whichever is lower, chosen each year. (The €5,000 threshold was raised from €3,420 by the 2026 reform.) A Cyprus widow(er)'s pension is taxed at a flat 20% on amounts over €22,000, or under the normal bands.

Deductions and allowances (from 2026)

The 2026 reform introduced a package of personal deductions. Most are subject to household income limits, for couples: up to €90,000 (no children), €100,000 (one or two children), €150,000 (three or four), €200,000 (five or more); and up to €40,000 for a single individual:

An allowance for each dependent child (dependent children include students up to age 24), with increasing amounts for additional children
A €1,000 allowance for each dependent student
A housing deduction of up to €2,000 (per spouse/cohabitee) for interest on a loan to acquire a primary residence, or for rent paid on a primary residence
A deduction of up to €1,000 (per spouse/cohabitee) for the energy upgrade of a primary residence or the purchase of a new electric vehicle

Separately, with no income limit:

A deduction of up to €500 per year for premiums to insure a Cyprus residence against natural disasters (fire, earthquake, flood, etc.)

Existing deductions continue to apply, including: social insurance, GHS, approved provident/pension fund contributions and life-insurance premiums (deductible together up to one-fifth of taxable income — life-insurance relief now also covers permanent or partial incapacity); 20% of gross rental income for rented buildings; and donations to approved charities.