Payroll in Cyprus

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Mercans is your go-to payroll provider in Cyprus for premier payroll services. Our unwavering commitment to delivering exceptional payroll solutions in Cyprus makes us the preferred choice for businesses of all sizes. With years of experience in payroll in Cyprus, Mercans ensures accurate and compliant payroll services, offering timely and accurate payroll transactions along with the convenience of multi-currency payments. As your dedicated local payroll provider in Cyprus, we boast a team of in-country payroll specialists with deep knowledge of local laws, offering comprehensive support for a seamless payroll experience tailored to your business needs.

Everything you need to know before running payroll in Cyprus

Working Hours and Overtime

In Cyprus, the standard working week is generally set at 38 to 40 hours over five days, depending on sector and applicable collective agreements. Certain industries, such as retail, may operate on a six-day schedule due to business requirements.

Working hours vary across sectors. In the public sector, working hours are typically shorter, while private sector schedules commonly range between 08:00 and 18:00 depending on industry practices.

The maximum working time, including overtime, must not exceed 48 hours per week on average, in line with EU Working Time Directive requirements. Employees are entitled to minimum rest periods, including 11 consecutive hours of daily rest and at least 24 hours of uninterrupted weekly rest.

Overtime arrangements are generally governed by employment contracts or collective agreements. Where not specified, employee consent is required, and overtime must be compensated accordingly.

Minimum Wages

Cyprus operates a national minimum wage framework introduced in recent years, with rates reviewed periodically by the government. Employers must apply the latest official minimum wage rates as published by the Ministry of Labour and Social Insurance.

13th Month Salary

In Cyprus, a 13th-month salary is not mandated by law but may be provided through employment contracts, collective agreements, or company policy. Where such payments are contractually agreed or established as practice, they are considered part of regular remuneration and must be honored.

Additional salary payments such as 13th or 14th salaries are typically treated as non-regular earnings for social insurance purposes and declared separately in payroll reporting.

Payroll Cycle

In Cyprus, the typical payroll schedule is monthly, with payments usually made by the last working day of each month.

Company Formation in Cyprus

Verify and reserve the company name with the Registrar of Companies.
Submit incorporation documents including registered office details and company structure.
Provide identification and details of shareholders, directors, and company officers.
Private limited liability companies generally require at least one shareholder and one director, with no strict minimum share capital requirement.
Public limited companies are subject to minimum capital requirements under current legislation.
Open a corporate bank account upon incorporation.
Register with Social Insurance Services and obtain necessary employment registrations.

Payroll Compliance in Cyprus

In Cyprus, employers are obligated to comply with statutory filing and reporting requirements in accordance with local legislation.

Statutory Filings and Contributions

Authority	Form	Frequency	Due Date	Purpose
Tax Department	TD7	One-time	Upon hiring employees	Employer registration
Tax Department	TD4	Annual	31 May (approx)	Employer annual return
Employer → Employee	TD63	Annual	By 31 July	Certificate of earnings
Tax Department	PAYE (TD61)	Monthly	End of following month	Tax withholding payment
Social Insurance	SI Contributions	Monthly	End of following month	Social insurance payments
Social Insurance	Benefit Forms (YKA series)	Ad hoc	As required	Claims (maternity, sickness, etc.)

Government Requirements

Registration Requirements

Employers must register with the Tax Department and Social Insurance Services before hiring employees.
Employees must also be registered for tax and social insurance purposes.

Income Tax Withholding by Employers

Employers must apply PAYE withholding tax and remit it to the Tax Department monthly.
Penalties and interest apply for late payments.

Tax Residency and Income Tax

Tax residents are taxed on worldwide income, while non-residents are taxed on Cyprus-source income.

Significant Exemptions for Income Tax Purposes

Certain exemptions may apply to employment income and other income types subject to conditions.

Social Insurance Contributions

Employers and employees contribute to the Social Insurance Scheme.

Contributions to the General Health Care System

Contributions to the General Healthcare System (GHS) are mandatory and calculated on employee income up to statutory limits.

Minimum Monthly Salary

Minimum wage requirements apply in accordance with national regulations.

Working Time

Maximum working time is aligned with EU standards, generally capped at 48 hours per week including overtime.

Minimum Annual Leave

Employees are entitled to statutory annual leave depending on working days per week.

Sick Leave

Sickness benefits are administered through social insurance.

Payment Frequency

Payroll is typically processed monthly, though other cycles may be used.

Certificate of Emoluments (Form TD63)

Employers must provide annual statements of earnings and deductions to employees.

Payroll Taxes in Cyprus

Social Security in Cyprus

Social insurance contributions are shared between employers and employees, with rates periodically adjusted by legislation. Contribution ceilings for insurable earnings are also updated annually and must be applied accordingly.

Fund	Employer	Employee
Social Insurance	8.80%	8.80%
Redundancy	1.20%	—
Training and Development	0.50%	—
Social Cohesion	2.90%	—
GESY (Healthcare)	2.90%	2.65%
Total	~15.40%	~11.45%

Personal Income Taxes in Cyprus

Cyprus maintains a competitive personal income tax system. Tax residents are taxed on worldwide income, while non-residents are taxed only on Cyprus-source income.

The 183-day Rule

Individuals spending more than 183 days in Cyprus during a tax year are considered tax residents.

The 60-day Rule

Individuals may qualify as tax residents under the 60-day rule if they meet specific criteria including residence, employment, and economic ties.

Personal Tax Rates

Taxable Income (€)	Rate
0 – 22,000	0%
22,001 – 35,000	20%
35,001 – 60,000	25%
60,001 – 72,000	30%
Above 72,000	35%

Income Tax Exemptions

Various exemptions and deductions apply depending on income type and individual circumstances.

Employee Benefits in Cyprus

Employee benefits in Cyprus include both statutory and voluntary offerings.

Mandatory benefits include contributions to social insurance and healthcare systems, as well as paid leave entitlements. Employers often provide additional benefits such as private medical insurance, bonuses, pension schemes, and flexible working arrangements to attract and retain talent.

Leave Benefits in Cyprus

Employees are generally entitled to paid annual leave ranging from 20 to 24 days depending on their work schedule.

Maternity and Paternity Rights

Maternity Leave

Employees are entitled to maternity leave in accordance with statutory provisions.
Maternity benefits are paid through social insurance based on insurable earnings.

Paternity Leave

Eligible fathers are entitled to statutory paternity leave.

Parental Leave

Parental leave is available subject to eligibility requirements.

Sick Leave and Benefits

Sickness benefits are provided through social insurance subject to contribution history.

Benefits of Payroll Outsourcing in Cyprus

Adherence to Complex Regulations

Ensures compliance with evolving labor and tax regulations.

Access to Advanced Technologies and Expertise

Enhances efficiency and accuracy through specialized tools and expertise.

Cost-Efficiency and Competitive Pricing

Reduces internal administrative costs.

Supporting Business Expansion

Provides scalable payroll solutions for growth.

High Security Standards

Ensures data protection through certified systems.

Consistent and Sustainable Performance

Delivers reliable payroll processing.

Flexibility and Scalability

Adapts to evolving business needs.

Collaborative Cloud Tools

Enables efficient collaboration and access.

Payroll Solutions in Cyprus

Unleash the power of seamless payroll processing in Cyprus with Mercans’ Global Payroll Solutions. Our flexible models ensure local compliance, streamline multi-currency transactions, and integrate with global HCM and ERP systems.

SaaS: Designed for enterprise payroll complexity.
Managed Services: Comprehensive payroll outsourcing solution.

Streamline Payroll with Mercans’ Technology and Integrations

Technology: Explore advanced payroll technology here
Integrations: Seamless system integration here.
Recognitions: Explore awards and recognitions here.

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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FAQs

How do you ensure compliance with Cyprus’s mandatory 13th-month salary requirements?

While Cyprus does not mandate a 13th-month salary, we ensure any contractual or customary year-end payments are processed in full compliance with local payroll regulations.

What strategies do you employ to manage Cyprus’s complex payroll tax structure?

We combine in-country expertise with automated payroll systems to manage Cyprus’s progressive income tax rates and social insurance contributions accurately and efficiently.

How do you handle payroll for remote or international employees in Cyprus?

We ensure payroll for remote and international employees complies with Cyprus’ requirements while maintaining alignment with global payroll standards and timelines.

What challenges have you encountered when integrating payroll data from various departments and international offices, and how did you overcome them?

We address integration challenges by centralizing payroll data within a unified platform that streamlines reporting and ensures consistent payroll workflows across offices.

How do you manage currency conversions and fluctuations in global payroll processing in Cyprus?

We manage multi-currency payroll using real-time exchange rates and robust safeguards to ensure employees are paid accurately and on time, regardless of currency fluctuations.

What payroll software or systems do you recommend for managing compliance in Cyprus?

We recommend a global payroll platform with in-country expertise that automates compliance, reporting, and statutory requirements to ensure efficiency and accuracy.