Cyprus Tax Deductions Checklist — 12 Things to Claim on Your TD1

Most Cyprus taxpayers leave money on the table by missing deductions on their TD1 return. This is the full 2025 checklist — combined, these allowances can knock €2,000–€5,000 off your tax bill.

The "1/5 of taxable income" cap

Cyprus law caps total deductions for life insurance, provident fund, social insurance, pension, and GHS contributions at one-fifth (20%) of your taxable income before these deductions. Once you hit the cap, extra contributions don't lower tax further.

1. Social insurance contributions

Employee social insurance (8.8% of gross, capped at €66,612 of insurable earnings) is fully deductible. Your annual contribution certificate from your employer shows the figure.

2. GHS (General Healthcare System) contributions

2.65% GHS on most income streams, capped at €180,000 of total annual income, is deductible against income tax.

3. Provident fund contributions

Employee contributions to an approved provident fund are deductible — usually around 5% of salary, depending on your fund's rules.

4. Life insurance premiums

Premiums on a life insurance policy on your own life (or your spouse's) are deductible up to 7% of the insured amount. If you cancel the policy within 6 years, prior deductions are clawed back.

5. Approved pension scheme contributions

Voluntary contributions to an approved personal pension or annuity scheme are deductible within the 1/5 cap.

6. Trade union and professional body subscriptions

Fees paid to recognised trade unions or professional bodies relevant to your employment (e.g., ICPAC, Cyprus Bar Association) are deductible.

7. Donations to approved charities

Donations to charities on the Tax Department's approved list are fully deductible with a receipt showing the charity's approval number.

8. Rental income — 20% wear and tear (automatic)

20% of gross rental income is automatically deductible with no receipts required. See our rental income tax guide for the full landlord deduction list.

9. Self-employed expenses

Any expense wholly and exclusively incurred for your business — office rent, professional indemnity insurance, business travel, software subscriptions, home-office portion of utilities — is deductible from self-employment income.

10. 50% exemption for high-earning foreign employees

First-time employment in Cyprus with remuneration above €55,000 qualifies for a 50% income tax exemption for 17 years, provided you weren't a Cyprus tax resident in the 15 years before starting the job.

11. 20% exemption for lower-earning foreign employees

First-time employment with remuneration below €55,000 qualifies for a 20% exemption (capped at €8,550 per year) for 7 years.

12. Interest on innovative-business investment

Investments in qualifying Cyprus innovative SMEs allow up to 50% of the investment to be deducted from taxable income, capped at 50% of taxable income or €150,000 per year.

Maximise your refund

We file your Cyprus TD1 from €30 and a licensed advisor checks every deduction box on the form. Most of our clients recover more in missed deductions than the fee itself.