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Freelancer in Cyprus Tax Guide

A freelance business is typically owned and operated by one individual. Freelance business offers a great deal of freedom, as the business owner is not accountable to partners and does not need to share any profits.

Freelancer Cyprus business V Limited company

A freelance business can do everything a limited company can do; employ staff; sign contract; enter into loans with banks, register for VAT, register as trading name and so on. A limited company, however, can confer some prestige and reliability but the main difference is that a limited company provides “limited liability” to the owners of the company.  It can also be tax advantageous to have a Ltd company – if the income and profit are substantial enough.

Operating as a freelancer is less expensive as there are zero setup / incorporation costs and no requirement for annual audited accounts if the revenue is below €70.000. Moreover your first €19,500 of income is tax free.  Tax rates then start at 20% and rise progressively to 35% for income over €60,000. The profits of limited companies are taxed at a flat rate of 12.5%.

Benefits for non-Cypriot freelancers

One of the greatest advantages that individuals from EU and EFTA (European Free Trade Association) countries have when setting up a freelance business in Cyprus is that they do not need a work or residence permit in Cyprus. Non-EU/EFTA citizens, however, are required to apply for work and residence permits before coming to Cyprus.

Individuals from both EU and Non-EU countries may claim their non-domiciled status and be exempted from defence tax for 17 years.

The defence tax applies to worldwide investment income of individuals who are resident and domiciled in Cyprus, at the following rates.

  • Interest – 30% (reduced to 3% if your income is less than €12,000)
  • Dividends 17%
  • Rental income – 3% (on 75% of gross income) 

Freelancer Cyprus – Conclusion

Freelance business in Cyprus may be ideal in some cases but analysis of the circumstances of each case are required before an informed decision can be made. Therefore, it is highly recommended that the advice of a local specialist is sought.

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Self-employed Set-Up Service

This service is available across Cyprus

Location

1Who is this service for?

This is the most inexpensive way to set up a business.

You will be self-employed and work within a simple structure implying little bureaucracy in which, basically, you are paid with the profits of your company.

You will not be considered as an employee, and will have less social benefits than you would as a regular employee. You will be liable for any and all losses incurred by the business.

2What does this service consist of?

  • Obtain residence permits or work permits.
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  • Registration with the Tax Authority and the Social Security System.
  • Help you to choose the right business name.
  • Choose your business activity. We can provide you with a list of recommended activities (list of trade licenses that are approved by administrative bodies).
  • Business address (whether it will be only for correspondence or you will really make your business there).
    Recommendations regarding the most appropriate fiscal arrangements to ensure taxation levels are optimised
  • Resolution of tax enquiries related to your professional activity.
  • Completion and presentation of all required tax returns.
  • Maintenance of all legally required records (income, expenses, invoicing, assets).
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3Free Support Services Included

When combined with the free and innovative Advocate Abroad support services you can be sure that you are obtaining completely transparent legal services from registered and regulated English-speaking lawyers abroad.These support services include:

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  • Fees as recommended by the Local Professional Body
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  • All professionals must hold professional indemnity insurance.
  • Professionals' proficiency in English monitored.
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