Cyprus 50% tax rule for individuals

For the year 2022, individuals who receive salary over €100,000 are eligible for a 50% reduction on their income tax liability, up to a maximum of €20,000. This means that the income tax liability for these individuals will be reduced by 50% of the amount that exceeds €100,000, up to a maximum of €20,000.

For example, if an individual earns a salary of €120,000, the income tax liability would be calculated as follows:

• Tax on the first €19,500: €0 (0% tax rate)
• Tax on the next €8,500 (€28,000 - €19,501): €1,700 (20% tax rate)
• Tax on the next €8,300 (€36,300 - €28,001): €2,075 (25% tax rate)
• Tax on the next €23,700 (€60,000 - €36,301): €8,045 (30% tax rate)
• Tax on the next €20,000 (€100,000 - €80,001): €7,000 (35% tax rate)
• Tax on the remaining €20,000 (€120,000 - €100,001): €7,000 (35% tax rate)
• The total tax liability would be €26,820

Then the special rule is applied:

• 50% reduction on the amount that exceeds €100,000: €7,000 x 50% = €3,500
• So the total tax liability would be €26,820 - €3,500 = €23,320

The social insurance contribution for an individual earning €120,000 would be €7,020 Therefore, the gross salary (before taxes) that corresponds to a net salary of €120,000 is €142,320.