Cyprus Self-Employed — IR1/TD1 Return & Provisional Tax

Establish the client's tax residency status (183-day or 60-day rule) and domicile classification, because these determine worldwide vs Cyprus-source scope and whether Special Defence Contribution (SDC) applies. Confirm the tax year in question and whether the 2025 or 2026 reformed rate bands apply. Identify the business activity and VAT registration status.

Collect all business receipts from bank statements (Bank of Cyprus, Hellenic Bank, Revolut Business, Wise, etc.) and reconcile against issued sales invoices. Where the client is VAT-registered, strip the 19% VAT from gross receipts to arrive at net business income. Identify any platform income (Stripe, PayPal, Upwork, Fiverr) and confirm net-of-commission amounts.

Classify all debit transactions against the wholly-and-exclusively test under the Income Tax Law (Law 118(I)/2002). Separate fully deductible operating expenses (professional fees, ICPAC subscriptions, SaaS, marketing) from mixed-use items requiring apportionment (home office, vehicle, phone/internet) and capital items requiring wear-and-tear allowances (laptops, equipment, furniture). Flag non-deductible items (entertainment, personal drawings, fines, income tax payments).

Calculate the self-employed Social Insurance contribution (16.6% on deemed/notional insurable income, capped at EUR 66,612/year) and GHS/GESY (4.0% on total income, capped at EUR 180,000/year). Apply the 1/5 (20%) deductions cap to the combined Social Insurance + GHS + life insurance + pension/provident contributions. Confirm quarterly contribution payment dates and any arrears that affect the deductible amount.

Compute chargeable income (gross business income less deductible expenses, less allowable contributions within the 1/5 cap). Apply the progressive PIT bands — 2025: 0% up to EUR 19,500; 20%, 25%, 30%, 35% above; 2026 reform: 0% band rises to EUR 22,000 with adjusted higher bands. For domiciled residents, calculate SDC on any dividend, interest, or rental income (dividend SDC reduces from 17% to 5% from 1 January 2026; SDC on rent abolished from 2026). Confirm any expat exemptions (50% under Art. 8(23A) for remuneration above EUR 55,000, or 20% up to EUR 8,550).

Review the two provisional (temporary) tax instalments paid on 31 July and 31 December of the tax year. Compare total provisional tax declared against the final PIT liability to check whether the 75% threshold is met — if declared provisional tax is less than 75% of the final liability, a 10% surcharge applies. Calculate the balancing payment due by 31 July of the following year (or 1 August where applicable) and flag late-payment penalties (5% surcharge) if applicable.

Prepare and submit the IR1/TD1 annual income tax return electronically via TAXISnet (taxisnet.mof.gov.cy) for tax years up to 2025, or via the new Tax For All (TFA, tfa.mof.gov.cy) portal for tax year 2026 onwards. Filing deadline for self-employed with turnover up to EUR 70,000 is 31 July of the following year; those with turnover exceeding EUR 70,000 require audited accounts and have until 31 March of the second year following the tax year. Confirm submission reference and archive all supporting documentation.