How can an Umbrella Company Help with Contracting in Cyprus?
Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.
They’re called Umbrella Companies (or, contractor management companies).
Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.
Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in Cyprus. Even better, most are experts in Cyprus and expat tax law, meaning they’ll also help you optimise your earnings in Cyprus.
Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.
Can I Organise My Taxes and Work Permit Myself?
Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Cyprus.
If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.
Also, are you familiar with the intricacies of the tax system in Cyprus, as well as your own country’s laws on overseas earnings? If so, good on you!
However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in Cyprus and your home country can seem like full-time work in itself.
A Contractor’s Guide to Taxes in Cyprus
One of the most consistently challenging aspects of contracting in Cyprus is complying with the country’s tax system. As well as paying tax in Cyprus, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
How do I calculate my taxable income in Cyprus
If you’re working in Cyprus under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Cyprus for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Cyprus, but contractors may not be offered this service because of their short stay with each employer.
Anybody who can’t pay their tax in Cyprus through PAYE is left with the prospect of doing everything themselves.
Do you know much about Cypriot Tax Law? Does Cyprus have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Cyprus can range from 20 to 35 percent, and you need to be sure you are placed in the correct tax brackets.
Tax Filing as a Contractor in Cyprus
|When Do You Need to Lodge Your Tax Return?||Tax returns can be lodged once the tax year has ended. The tax year in Cyprus is the calendar year.|
|Tax Filing Deadline||For the 2017 tax year, the deadline for filing returns is 31 October. An administrative penalty of €100 or €200 is imposed for the late submission of a tax return or late submission of supporting document requested by the Commissioner.|
|Can you file it online?||Yes, https://taxisnet.mof.gov.cy/login.jsp|
How to File Taxes in Cyprus as a Contractor
As of 2018, income tax returns in Cyprus must be filed electronically. The process for filing income taxes in Cyprus involves:
Step 1: Register for the TaxisNet system here(link is external). You will be required to input your Taxpayer’s Identification Code (T.I.C) and Unique Registration Number. You will be issued an email to set up a PIN.
Step 2: Login to TaxisNet(link is external) using your T.I.C and PIN number.
Step 3: Enter the value for all sources of income. Income that is exempt from tax includes: dividends, interest, gains from the disposal of securities, rent from preserved buildings (subject to certain conditions) and lump sum from life insurance schemes.
Step 4: Enter any relevant deductions. Deductible expenses include donations, expenses for the letting of buildings, subscriptions to trade unions, investments in innovative small and medium sized business and others.
- More information can be found on this fact file(link is external).
Step 5: Attach any supporting documents.
Step 6: Submit the tax return.
Step 7: If you have outstanding tax to be paid, this can be done electronically via their online JCC Smart Portal(link is external). A fine of 5% on the tax due will apply for late payments.
Tax Figures in Cyprus
|Tax-free Threshold in Cyprus||EUR 19,500|
|Income Tax Rates||
Tax Residency in Cyprus
When do you become a tax resident in Cyprus
You become a tax resident in Cyprus when:
- Present in Cyprus for an aggregate of more than 183 days in any calendar year.
- Is not a tax resident of another country
- Maintains a permanent home in Cyprus that is either owned or rented.
Does the 183 day rule apply in Cyprus
Am I taxed on my global income in Cyprus
Residents are taxed on their worldwide profits or other benefits from a business, dividends, interest or discounts, pensions and any rental income. Non-residents are only taxed on their Cyprus sourced income.
Can you set up your own Limited Company in Cyprus?
|How long does it take to set up||6 days|
|How much does it cost||EUR 1,515|
|Is it easy?||Starting a Business Rank: 50 https://www.doingbusiness.org/data/exploreeconomies/cyprus|
Tax Calculator in Cyprus
If you are a contractor and want a calculation on your tax and net retention in Cyprus, we can supply it to you free of charge.
Using an Umbrella Company for Income Tax in Cyprus
Contractors in Cyprus are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Cypriot umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).
The companies are experts in Cypriot taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Cypriot tax office or tax department directly including processing your tax refund if you are eligible.
How We Can Help You with Tax in Cyprus
We work with numerous umbrella companies in Cyprus, many of whom are experts in tax and immigration laws. If you have any questions about tax in Cyprus, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Cypriot work permit.
Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Cyprus but without the overhead of directly dealing with the Cypriot tax authorities. Get in touch with us today for some reliable advice on tax in Cyprus!
A Contractor’s Guide to Work Permits in Cyprus
Immigration is one of the primary concerns for any contractor hoping to start working in Cyprus. Permanent employees will find it easy to get their Cypriot work permit because they’ll receive “sponsorship” for their entire stay from their prospective employer.
The Cypriot work permit, is dependent on this sponsorship because it confirms that you’ll be earning money during your stay in the country. Contracting in Cyprus is more difficult because the work permit is tied to one employer, so you have to change it to suit each new contract. Thankfully, umbrella companies provide a convenient and effective solution to this issue.
How Does an Umbrella Company Work?
Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.
When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.
While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in Cyprus (which means avoiding fees, fines, or even worse penalties).
How Can We Help You?
There’s a huge variety of Umbrella Companies with different specialities and advantages in Cyprus. How do you find the right one for your circumstances?
We work closely with Umbrella Companies all throughout Cyprus and match contractors with the right company for them. If you’ve already secured a contract in Cyprus, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).