Tax-Free Income in Cyprus: Current State and Reform Prospects
September 28, 2025
Cyprus has the highest tax-free income in the EU, according to a study by the Parliament. Annual incomes up to €19,500 are tax-free, while taxes on higher incomes range from 20% to 35%. The Cypriot tax system is simplified but has limited social targeting and redistributive functions. There is a need for reform of the tax system, planned to be implemented in 2026. Improving family tax exemptions and the progressivity of taxation is crucial.