Payroll Taxes in Cyprus: A Complete Guide for Employers

For employers operating in Cyprus, understanding payroll taxes and social insurance contributions is a crucial part of legal compliance and financial planning. The Cypriot system is designed to be straightforward, but it requires a clear understanding of the various contributions from both the employer and the employee. This guide provides a complete overview of payroll taxes in Cyprus for 2025, from social insurance and income tax to the General Healthcare System (GHS) contributions. For a broader look at the local business environment, you can read our guide on The AI-Powered Marketer: Business Adviser.

1. Key Payroll Contributions for Employers and Employees

Payroll in Cyprus is comprised of three main contributions: Social Insurance, the General Healthcare System, and Income Tax. These contributions are shared between the employer and the employee, with the employer responsible for collecting and remitting all contributions to the relevant authorities. You can find more information about this in our FAQ Guides section.

Social Insurance Contributions

Social Insurance is a mandatory contribution for all employees and employers in Cyprus. It is a key part of the social welfare system and provides benefits such as pensions, unemployment benefits, and sickness benefits. The contributions are calculated as a percentage of the employee's gross monthly salary. The contributions for 2025 are:

Employee Contribution: **8.3%** of gross salary (up to a maximum insurable earnings limit).
Employer Contribution: **8.3%** of gross salary (up to a maximum insurable earnings limit).

The maximum insurable earnings limit is set annually by the government. For professional advice on tax planning, you can find a suitable firm in our Professional Corporate Services and accounting and auditing firms directories.

General Healthcare System (GHS) Contributions

The General Healthcare System (GHS), or GeSY, is a new healthcare system in Cyprus that provides universal access to healthcare services. The system is funded by contributions from both employees and employers. The contributions for 2025 are:

Employee Contribution: **2.65%** of gross salary (up to a maximum insurable earnings limit).
Employer Contribution: **2.90%** of gross salary (up to a maximum insurable earnings limit).

The GHS contributions are a key part of the social welfare system and are mandatory for all employees and employers. This is a very important part of the legal and financial requirements and should be handled by a professional. You can also explore our business directory of all businesses on the island to find a good partner.

Income Tax (PAYE)

Income tax in Cyprus is a progressive tax that is deducted from an employee's gross salary on a Pay As You Earn (PAYE) basis. The tax is calculated based on a person's total annual income, and the tax rates are:

**0%** for income up to €19,500.
**20%** for income between €19,501 and €28,000.
**25%** for income between €28,001 and €36,300.
**30%** for income between €36,301 and €60,000.
**35%** for income over €60,001.

The employer is responsible for deducting the correct amount of income tax from the employee's salary and remitting it to the Cyprus Tax Department. For more on the local tax environment, you can check out our guide on Cyprus Corporate Tax. For a broader perspective on the registration process, you can read our guide on Cyprus Company Registration.

2. Compliance and Reporting for Employers

Employers in Cyprus have a number of compliance and reporting obligations that they must adhere to. These are designed to ensure the transparency and integrity of the business environment in Cyprus. You can find a good partner in our directory of finance, banking, and investment. For more on the local business environment, you can check out our guide on Cyprus Shelf Companies.

Registration: An employer must register with the Social Insurance Services, the Tax Department, and the Ministry of Labour.
Monthly Remittance: An employer must deduct the correct amount of social insurance, GHS, and income tax from an employee's salary and remit it to the relevant authorities on a monthly basis.
Annual Reporting: An employer must submit an annual tax return for each employee and for the company. These reports are a crucial part of the legal and financial requirements and should be handled by a professional.