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Mercans CountryIntel ® Cyprus Payroll And HR Insights

Mercans offers complete payroll, PEO and HR services in Cyprus

At the crossroads of Europe, Africa and Asia, Cyprus is a strategic midpoint linking three continents. Encouraging Foreign Direct Investment in priority economic growth sectors, Cyprus has introduced new measures, reform initiatives and investment opportunities. Possessing advanced technical infrastructure, Cyprus has become a regional quality business and financial centre and becoming an energy hub in the Eastern Mediterranean.

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Doing Business in Cyprus

Despite its small size, Cyprus’ productive labour force (which is largely multi-lingual), business-friendly government and its location (gateway to the European Union) makes it particularly attractive.

Entity Registration and Incorporation Requirements

Setting up a new business or expanding an existing one in Cyprus is straightforward. Choose how your company operates from a range of entity types which suit your individual circumstance.

Banking

Banks are open from Monday-Thursday 8am-2:30pm and Friday from 8 am-2 pm

Working Week

The standard working week is 40 hours per week usually worked from Monday to Friday, 8 hours per day

Labor Law

Cyprus’ legal system is fully compliant with the European Union (EU), the Financial Stability Forum laws and regulations and EU AML (Anti Money Laundering) directives. Terms and conditions of employment of foreign nationals must be the same as those for Cyprior nationals as set out by the model employment contracts required by the Ministry of Labour Welfare and Social Insurance.

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Main Industries

Tourism, food and beverage processing, cement and gypsum, ship repair and refurbishment

GDP Growth

1.50%

Dates & Numbers

dd/mm/yyyy

Official State Name

The Republic of Cyprus

Population

1.207 million

Capital

Nicosia

Major Languages

Greek, Turkish

Currency

€ Euro

Internet Domain

.cy

International Dialing Code

+357

Cyprus
Nicosia, CY
12:47 am, July 7, 2022
24°C
clear sky

Payroll

Salary and other benefits are not regulated by law. Therefore, this is to be negotiated by both employer and employee. However, for certain occupations (such as shop assistants, clerks, school assistants, security guards) a minimum wage is set annually.

It is acceptable to provide employees with online payslips

Payslip

-

Reports

20 working days

Annual Leave

156 days

Sick Leave

18 weeks of paid maternity leave and 2 weeks of paid paternity leave

Maternity & Paternity Leave

1 week

Employee Termination

While not compulsory, employees can be paid in December

13th month salary

There is no mandatory minimum rate of pay

Minimum Wage

All hours in excess of 40 hours a week are paid at an overtime compensation rate

Overtime

2 weeks' wages for each year of service up to 4 years

Severance Pay

Tax and Social Security

Cyprus offers an attractive and transparent tax regime, fully compliant with EU, OECD and international laws and regulations. Providing access to an extensive network of 60 Double Tax Treaties, Cyprus maintains a corporate tax rate of 12.5%, one of the lowest in the EU. The social security system provides a number of benefits including maternity allowance, sickness benefit, old-age pension, benefits for employment accidents and occupational diseases and more.

Tax

Companies who operate global payroll and maintain a presence in multiple locations should take note that some of the attractive features of the Cyprus tax system include exemption on disposal of securities, no withholding taxes, no succession taxes, no capital gains tax and an attractive IP (intellectual property) regime.

12.5%

Corporate Income Tax

35%

Personal Income Tax

19%

Sales Tax

19%

VAT

Social Security

Contributions can be made by those who are employed or self -employed. Employers make contributions for their employees. Individuals who have been dismissed by their employer may be able to receive a redundancy payment and the application should be submitted to any District Social Insurance Office.

16.6%

Social Security Rate

8.3%

Social Security Rate for Employers

8.3%

Social Security Rate for Employers

Employment Law

There are different categories of workers. An employee is someone who works for another person under a contract of employment. Independent contractors or the self employed are those for which an employment relationship cannot be inferred. Contingent workers are usually temporary employees employed for a fixed period of time but such a person may also be an independent contractor.

Employment Agreement

A written employment contract is not required in Cyprus. However, the law imposes an obligation on the employer to provide the employee with specific details regarding their employment. This includes their position, start date, notice period, leave entitlements and more

Working condition

The law does not distinguish between the rights of temporary workers and permanent employees. The law also prohibits discriminatory behaviour towards part-time employees.There are, however, no statutory rights to request flexible working in Cyprus.

Leaves

All employees are entitled to at least four weeks of paid leave per year and this requirement cannot be replaced with cash, with the exception of the termination of the employment contract. Employers in the private sector are not obligated to give employees extra leave on public holidays and/or to follow the public holiday scheme (although this is the usual practice). Employers are not legally obligated to pay sick leave for employees. Employees are entitled to statutory sick leave benefit from Social Insurance.

Employment termination

The notice period for termination is governed by the Termination of Employment Law 1967. Severance payments which are calculated according to the number of years of employment must be paid as soon as possible after dismissal. Dismissals must also be justified on certain grounds to be considered lawful, failing which the employee will be entitled to compensation.

1 week

Minimum notice period for terminating an employee

15

Total number of public holidays

40

Working hours per week

3-5 days

Total number of days for Compassionate & Bereavement Leave

Immigration

Typically, the permit of employment of foreign workers is dependent on whether the employer is able to meet their labour requirements by hiring locally. Work permits may be approved if there is a lack of suitably qualified local talent to satisfy the employer’s needs. However, the terms and conditions of the employment of foreigners should be the same as those for Cypriots.

Residency permits

The issue of entry and work permits in general categories of employment are submitted to the Civil Registry and Migration Department. Applications must be submitted with a work contract stamped by the Department of Labour of the Ministry of Labour and Social Insurance. There are also special categories of employment for domestic assistants, employees of companies of foreign interests and artists.

Work Permit validity

4 years

Required Documents

Any employment of third country nationals in Cyprus companies with foreign interests shall require the company to apply through the Civil Registry and Migration Department (CRMD) and provide the following supporting documents:

  • Company’s original incorporation documents signed and stamped by the Registrar of Companies
  • Description of the company’s activities and business
  • List of the employees currently working at  the company
  • Proof of the deposited amount of at least EUR200.000, supported by a bank SWIFT indicating that the initial investment was legally admitted to Cyprus from abroad.
  • Original bank statement showing a minimum balance of EUR 41,006
  • Title deed or lease agreement of the office in which the company is operating
  • Audited company accounts
  • Tax clearance certificate for the company
  • Proof of payment of the Annual Levy to the Registrar of Companies
Compliant, reliable, error-free and touchless payroll in Cyprus

Build the best team and hire top talent compliantly in Cyprus. Get in touch with Cyprus payroll outsourcing & PEO specialists for a free consultation!

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This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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