Employing staff in Cyprus creates a monthly cycle of withholding, contributions and returns, and an annual return at the end of the year. The 2026 tax reform also changed personal income tax bands, and monthly reporting now runs through the Tax Department's Tax For All (TFA) platform. This guide sets out the obligations for 2026 in the order an employer meets them.
1. Register before the first payroll
- Social Insurance: register as an employer with the Social Insurance Services before employing anyone, and register each employee.
- Tax Department: the company and each employee need a tax identification number, and the employer uses Tax For All for payroll withholding returns and payments.
- Written terms: give each employee written information on the essential terms of employment within the statutory time limits.
2. Contribution rates for 2026
| Contribution | Employee | Employer | Base |
|---|---|---|---|
| Social Insurance | 8.8% | 8.8% | Up to €5,742 a month for monthly-paid staff (€1,325 a week for weekly-paid) |
| GeSY (General Healthcare System) | 2.65% | 2.90% | Up to an annual base of €180,000 per person |
| Social Cohesion Fund | None | 2.0% | Total emoluments, with no ceiling |
| Redundancy Fund | None | 1.2% | Insurable earnings |
| Human Resource Development (industrial training) | None | 0.5% | Insurable earnings |
| Central Holiday Fund | None | 8.0% | Only where the employer is not exempt |
Reaching the Social Insurance ceiling does not stop GeSY contributions, which continue up to their own annual base.
3. Withhold income tax under PAYE
Employers deduct income tax from salaries each month, applying the employee's available deductions and exemptions. From 2026 the personal income tax bands are:
| Chargeable income | Rate |
|---|---|
| €0 to €22,000 | 0% |
| €22,001 to €32,000 | 20% |
| €32,001 to €42,000 | 25% |
| €42,001 to €72,000 | 30% |
| Above €72,000 | 35% |
Directors' fees and other remuneration paid to company officers are also employment income for PAYE purposes. For residency-related questions affecting relocating staff, see our Cyprus tax residency service and the 2026 personal tax reform guide.
4. The monthly cycle
- Run payroll and calculate gross pay, income tax, Social Insurance, GeSY and employer fund contributions.
- Submit the monthly payroll return through Tax For All. The return creates the amounts due, so it must be filed before the tax and GeSY are paid.
- Pay the withheld tax and contributions, generally by the end of the month following the payroll month.
- Pay Social Insurance and fund contributions to the Social Insurance Services within their monthly deadline.
Employers that withhold and pay monthly file twelve monthly returns for the year. An employer whose staff or officers had no withholding still generally files at least one monthly return together with the annual return.
5. The annual employer return
After the year ends, the employer files the annual employer's return (Form T.D.7) through Tax For All. It summarises remuneration, PAYE withheld and employee and employer GeSY contributions for each employee and company officer. For the 2026 tax year the deadline is 31 May 2027. Deadlines for earlier years have been extended more than once, so always confirm the current date with the Tax Department. Employees should also receive an annual statement of their remuneration and the tax withheld, for their personal returns.
6. Minimum wage from 1 January 2026
The national minimum wage for full-time employment is €1,088 a month after six months of continuous service with the same employer, and €979 a month before then. These levels apply from 1 January 2026 to 31 December 2027. Sectors covered by their own collective agreements or sector orders may have different rules.
7. Other 2026 changes employers should know
- Share options. Gains from approved employee share option schemes are taxed at 8%, subject to a cap of €1 million over ten years. Existing schemes needed approval by 30 June 2026.
- Ex-gratia payments. Ex-gratia payments to employees are no longer tax deductible for the employer and follow a special tax treatment for the employee.
- Wider employment income. The reform widened the scope of taxable employment income, so benefits and allowances should be reviewed against the 2026 rules.
8. Common mistakes that lead to penalties
- Paying staff before registering as an employer with Social Insurance;
- paying tax or GeSY before the monthly return is submitted, so the payment cannot be matched;
- missing the monthly return in months with no withholding;
- applying 2025 tax bands or contribution ceilings to 2026 payroll; and
- treating directors' remuneration outside payroll.
Late payments attract interest and surcharges, and late returns attract penalties. A managed payroll with a monthly checklist removes most of the risk.
2026 update: new personal income tax bands with a €22,000 tax-free band apply from 1 January 2026, monthly payroll reporting runs through Tax For All, and the minimum wage rose to €1,088 (or €979 during the first six months).
Prepared by G. Adamides Audit Ltd. This article is general information, not advice for a specific fact pattern.