Payroll & Employment Guide Cyprus

Employment contracts in Cyprus must be documented in writing and must clearly outline the terms of employment. These contracts can be for a fixed or indefinite period and should comply with local labour law regulations.

Notice periods: 1 - 8 weeks, depending on the duration of employment.

Termination of employment: Requires proper justification and notice; unfair dismissal can lead to compensation claims.

Employers in Cyprus are legally obligated to provide specific benefits under national labour law, while many companies also choose to offer additional perks to attract and retain top talent. Understanding both statutory and optional benefits is essential for building a competitive and compliant employment package in Cyprus.

Mandatory benefits: General Healthcare System (GESY), social insurance fund,
Common perks: Private health insurance, provident funds, occupational pension plans, performance bonuses, flexible working hours, professional development, meal vouchers or allowances.
Leave policies: Annual leave, sick leave, maternity leave, paternity leave, parental leave, unpaid leave.

Cyprus has a favourable tax regime for both individuals and companies. Employers are responsible for deducting taxes and social contributions from employees’ salaries. Tax residents are taxed on worldwide income, while non-residents are taxed only on Cyprus-sourced income.

• Personal income tax: In Cyprus, personal income tax is applied on a progressive scale based on annual earnings. Income up to €19,500 is tax-free. Earnings between €19,501 and €28,000 are taxed at 20%, while income from €28,001 to €36,300 is taxed at 25%. For income between €36,301 and €60,000, the rate increases to 30%, and any income exceeding €60,000 is taxed at 35%.
• Corporate tax: A flat rate of 12.5% on company profits.
• Value Added Tax (VAT): Standard rate of 19%, with reduced rates of 5% and 9% for specific goods and services.
• Special defence contribution: Levied on interest, dividends, and rental income for residents.
• Capital gains tax: 20% on gains from the sale of immovable property in Cyprus.

Cypriot employers must comply with payroll rules regarding payment frequency, contributions, and reporting. Salaries must not fall below the national minimum wage and are typically paid monthly.

Salary payment deadline: Last working day of the month.
Taxes and contributions payment deadline: By the end of the following month
Payroll declarations deadline: In Cyprus, payroll inputs are due by the 12th of each month. Invoices are issued on the 15th, and payslips are shared on salary payment day. Deadlines may shift slightly due to public holidays or weekends.
Payroll currency: Euro (EUR)

Employment in Cyprus is governed by national labour laws and EU directives. These laws cover minimum wages, employment contracts, leave entitlements, termination, and social security contributions.

Total employment cost:

• Employer’s social security contributions: 14.9%
• Employer’s health insurance costs: 2.9%
• Employees’ social security contributions: 10.95%
• Employee’s health insurance costs: 2.65%

Minimum wage: €1,000/month

Probation period: Up to 6 months

Foreign nationals may require a visa or work permit to work in Cyprus, depending on their nationality. Cyprus is part of the EU, so EU/EEA nationals do not need a permit, while others must follow specific immigration procedures.

• Types of permits: Work permit, residence permit
• Process time: Around two and a half months.
• Process cost: Starts at* € 2,000 for a 2-year permit or € 2,500 for a 3-year permit.

*Please note that additional costs may apply after reviewing individual use cases.

Need help with relocation, visas, or permits in Cyprus?

Using EOR services in Cyprus allows you to legally employ individuals in the country without opening legal entities there. The EOR takes over all the legal responsibilities as an official employer, including:

• Legal employment and contracts
• Payroll processing
• Tax withholding
• Benefits administration
• Onboarding/offboarding employees

Using PEO services in Cyprus provides HR and administrative support, while you remain the legal employer. PEO services are ideal for employers who already have legal entities in Cyprus but need support to manage their workforce operations, including:

• HR support and workforce administration
• Payroll and benefits management
• Compliance and local labour law guidance
• Employment contracts assistance

Native Teams provides a payroll calculator adjusted per Cyprus’s labour laws. Estimate gross-to-net salaries, tax withholdings, and employer costs in Cyprus with our localised calculator. Designed to meet all payroll and compliance requirements.