Taxes and payrolls: the labour market in Cyprus
Each labour market has some peculiarities. It may be tricky for foreigners to understand fully the payment methods, the taxes and other benefits related. In TalentUp we are starting a series of different blog articles, one for each country. This article analyses the Cyprus labour market.
General data about the Cypriot labour market
| Minimum wage | 940€ (885€ for the first six months of work) |
| Payment basis | Monthly |
| Payment | Must be paid by the last working day of the month |
| Maximum working hours a week | 44h |
| Maximum overtime hours a week | 4h |
Payroll taxes in Cyprus
Social security contributions are made by the employer and the employee and are used for funding unemployment, pension, maternity/paternity leave, and sickness or injury.
| Contingencies | Employer % | Employee % |
| Social Insurance (Maximum annual earnings of 60,060 EUR) | 8.3 | 8.3 |
| Social Cohesion Fund | 2 | |
| Severance Fund (Maximum annual earnings of 60,060 EUR) | 1.2 | |
| Training and Development (Maximum annual earnings of 60,060 EUR) | 0.5 | |
| National Health System (ESY) | 2.9 | 2.65 |
| Total | 22.9 | 10.95 |
Once contributions are paid, employees need to pay an income tax that varies depending on their gross salaries.
| Gross salary | Income tax % |
| Up to 19,500€ | 0 |
| From 19,500 to 28,000€ | 20 |
| From 28,000 to 36,300€ | 25 |
| From 36,300€ to 60,000€ | 30 |
| More than 60,000€ | 35 |
Contingencies from self-employees
As of 1 January 2019, the contributions of self-employed persons are 15.6% of their income. Thereafter, the rate will increase every five years until it reaches 20.4% as of 1 January 2039. The amount of the contributions is subject to a lower and a maximum limit, depending on the profession or trade of the self-employed person. These limits are set on an annual basis.
Example of net salary in Cyprus
As a reference, we use the average salary of a software engineer. In Cyprus, on average, software engineers earn annually 49,000€.
| Employer | Employee | |||
| % | € | % | € | |
| Gross salary (annually) | 49,900 | |||
| Social Insurance | 8.3 | 4,141.7 | 8.3 | 4,141.7 |
| Social Cohesion Fund | 2 | 998 | ||
| Severance Fund | 1.2 | 598.8 | ||
| Training and Development | 0.5 | 249,5 | ||
| National Health System (ESY) | 2.9 | 1,447.1 | 2.65 | 1,322.35 |
| Total | 22.9 | 7,435.1 | 10.95 | 5,464.05 |
| Income tax | 6,215.79 | |||
| Net salary (annually) | 38,220.17 |
The employer contributes 7,435.1€ to social security and the employee 5,464.05€.
After paying the income tax, the employee has a net salary of 38,220.17€ coming from a gross salary of 49,900€.
Unemployment regulation in Cyprus
The notice period for a temporary or permanent employee is dependent on the employee’s length of employment:
| Time worked | Notice period |
| 26 to 51 weeks | 1 week |
| 52 to 103 weeks | 2 weeks |
| 104 to 155 weeks | 4 weeks |
| 156 to 207 weeks | 5 weeks |
| 208 to 259 weeks | 6 weeks |
| 260 to 311 weeks | 7 weeks |
| 312 weeks or more | 8 weeks |
The severance pay varies based on the length of employment:
| Time worked | Severance pay |
| Less tha 4 years | 2 weeks |
| 5 to 10 years | 2.5 weeks |
| 11 to 15 years | 3 weeks |
| 16 to 20 years | 3.5 weeks |
| More than 20 years | 4 weeks |
Probation periods have a minimum length of six months, and a maximum length of two years.
Different kinds of leaves in Cyprus
The standard leave entitlement for employees who work a five-day week is 20 days per year or 24 days per year for employees who work a six-day week. There are 15 public holidays.
Employees get paid sick leave from the fourth sick day, covered by Social Security. A medical certificate must be sent to Social Security within 48 hours of sick leave start. Social insurance pays up to 312 days at 60% of salary; could be more with dependent family.
Employees are entitled to up to 5 days of paid leave due to a death of a direct family member.
Employees called to perform military service are covered by assimilated insurance (Social Insurance Services).
Paid parental leave
Women get 18 weeks of maternity leave, 22 for twins, and 26 for triplets. 11 weeks are mandatory, often 2 before due date and rest after. A medical certificate for pregnancy and due date is needed for eligibility.
Fathers are entitled to 2 consecutive weeks of paid paternity leave within the 16 weeks following the birth of a child, paid by the Social Insurance Fund at 75.20% of the employee’s regular salary.
Employees who have adopted a child under 12, are entitled to 16 weeks of leave.
Other common Cypriot benefits
| Benefit | % of companies with this benefit |
| Cutting Edge Technology | 12.5 |
| Cycle to Work Scheme | 12.5 |
| Disability Leave | 12.5 |
| Equal Opportunity Employer | 12.5 |
| Professional Development | 12.5 |
How to employ a Cypriot worker
To employ someone in Cyprus, you need to establish your own new legal entity, banking, accounting and payroll service in Republic of Cyprus.
Some platforms (Papaya Global among them) offer the Employer of Record (EoR) service helping companies hire countries where they do not have any office.
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