If you are self-employed in Cyprus, nobody withholds tax from your client payments. Income tax, social insurance and GeSY all arrive later, in separate bills from two different authorities. This guide puts the 2026 numbers in one place, works through two examples, and ends with a percentage you can actually use. It is based on the Tax Department's 2026 tax reform material and the Social Insurance Services' 2026 tables; the general method is in our EU-wide set-aside guide.
The short answer
With the 2026 rules, a self-employed person in Cyprus with a profit of €40,000 pays about €10,440 in income tax and contributions (about 26% of profit). At €60,000 profit it is about €18,960 (about 32%). Setting aside 30% of profit, plus all VAT you charge, is a reasonable starting point for that income range. The examples below show where these numbers come from and what they leave out.
What you pay as a self-employed person in Cyprus
- Income tax on your taxable profit, paid to the Tax Department: provisional tax in two instalments during the year, and any balance after the year ends.
- Social insurance: 16.6% of your insurable earnings, paid quarterly to the Social Insurance Services (SIS).
- GeSY (General Healthcare System): 4% of your self-employed income.
- HRDA: from 5 January 2026 the SIS table also lists a 0.5% contribution to the Human Resource Development Authority fund for the self-employed.
- VAT, if you are VAT registered: not your money, so it gets its own pot (see do I need to register for VAT in Cyprus?).
Income tax: the 2026 scales
The tax reform passed on 22 December 2025 applies from the 2026 tax year. It raised the tax-free band from €19,500 to €22,000 and changed the brackets:
| Taxable income (2026) | Rate on that slice | Cumulative tax at top of band |
|---|---|---|
| €0 – €22,000 | 0% | €0 |
| €22,001 – €32,000 | 20% | €2,000 |
| €32,001 – €42,000 | 25% | €4,500 |
| €42,001 – €72,000 | 30% | €13,500 |
| over €72,000 | 35% | – |
Taxable income is your business profit (income minus allowable business expenses) minus deductions. For most freelancers the main deduction is their social insurance and GeSY contributions, which, together with life insurance, approved medical funds and pension or provident funds, are deductible up to one fifth of taxable income (TD59 2026, note 10). The 2026 reform also added deductions for dependent children (€1,000 for the first, €1,250 for the second, €1,500 for each further child), housing and green spending, subject to conditions and family income limits. The examples below ignore those, so they overstate the tax for anyone who qualifies.
From 2026, Cyprus tax residents aged 25 to 70 must file a tax return regardless of income, and anyone with business income must register and file.
Social insurance, GeSY and HRDA
- Social insurance: 16.6% of insurable earnings (the state adds 5.2%). Insurable earnings are at least the 2026 minimum for your occupational category, for example €485.67 a week (about €25,255 a year) for accountants, lawyers and other professionals in their first ten years, and €982.38 a week after ten years. Contributions stop at the 2026 cap of €1,325 a week (€68,904 a year). Details and the full table are in our Cyprus social insurance guide.
- GeSY: 4% of self-employed income, on total income of up to €180,000 a year. Part of it is paid with your quarterly social insurance; the income tax return then works out 4% on your self-employed income, subtracts what you already paid, and anything left is due to the Tax Department.
- HRDA: 0.5% on the same weekly earnings, listed in the SIS 2026 contribution table as payable from 5 January 2026.
For planning, assume contributions are charged on your actual profit, up to the cap, and not only on your category minimum. If your profit is above the minimum, that is the safer assumption.
Two worked examples
A Cyprus tax resident with no other income, no children and no other deductions. Profit means income minus business expenses for 2026. Figures rounded to the euro.
| Profit €40,000 | Profit €60,000 | |
|---|---|---|
| Social insurance 16.6% | €6,640 | €9,960 |
| GeSY 4% | €1,600 | €2,400 |
| HRDA 0.5% | €200 | €300 |
| Deduction for SI + GeSY (capped at 1/5 of income) | €8,000 (cap; €8,240 paid) | €12,000 (cap; €12,360 paid) |
| Taxable income | €32,000 | €48,000 |
| Income tax | €2,000 | €6,300 (2,000 + 2,500 + 30% × 6,000) |
| Total tax and contributions | €10,440 (26.1% of profit) | €18,960 (31.6% of profit) |
Two things stand out. First, contributions are bigger than income tax at these income levels: in the €40,000 example social insurance alone is more than three times the income tax. Second, the effective rate climbs fast once taxable income goes past €42,000 and into the 30% band. You can check the income tax part with the Tax Department's official 2026 income tax calculator.
To turn this into a share of each payment, divide by income, not profit. If your expenses are about 10% of what clients pay you, 26% of profit is about 23.5% of each (VAT-exclusive) payment. Try your own figures in the tax set-aside calculator.
Want the percentage applied to every payment you log, with a running reserve?Freelancer Money OS – EU Edition is a €19 spreadsheet that does this for you (Excel + Google Sheets).
Provisional tax: the July and December instalments
Self-employed people declare an estimate of their taxable income for the current year (provisional tax) and pay the resulting tax in two equal instalments by 31 July and 31 December of the same year. In the €40,000 example that is €1,000 by 31 July 2026 and €1,000 by 31 December 2026. You can revise the estimate during the year. Any difference is settled after the year ends through your self-assessment and tax return; the Tax Department sets and often extends those filing deadlines each year, so check its deadlines page.
Do not under-declare to keep the instalments small. Cyprus charges an additional 10% on the shortfall if your estimate turns out to be below 75% of your final taxable income, plus interest and penalties on late payments. Confirm the current rules with the Tax Department or your accountant.
First-year trap: in your second year you can owe the balance for year one, the first provisional instalment for year two and your quarterly social insurance in the same summer. The set-aside account is what makes that manageable.
VAT is a separate pot
If you are VAT registered and charge Cyprus VAT (standard rate 19%) to local clients, hold that VAT apart from your tax savings: it is due with your quarterly VAT return. On B2B services to clients in other EU countries you usually charge no VAT (the client accounts for it under the reverse charge), so there is nothing to hold, but there is still paperwork. See Cyprus VAT registration for freelancers and reverse charge VAT.
A simple set-aside routine
- Open a separate savings account for tax (and a second one for VAT if you charge it).
- When a client pays, move your percentage of the VAT-exclusive amount the same day, plus all the VAT.
- Pay social insurance (quarterly), provisional tax (July and December) and VAT only from those accounts.
- Once a quarter, compare the balance with what you expect to owe, and adjust the percentage when your income changes.
General information based on official Cyprus sources checked on 21 October 2026, not tax advice. Deductions, residence, other income and special regimes can change the result. Confirm your figures with the Tax Department, the Social Insurance Services or a Cyprus accountant.