Payroll & Employment Guide: Cyprus

Hiring in the United States

When hiring in the U.S., employers must identify the correct work location, classify workers properly and register with federal and state tax agencies before running payroll. Federal rules provide the baseline, but state and local laws often go further on wages and leave.

Key steps when hiring in the U.S.:

• Determine the employee’s work state and city — local laws may set higher minimum wages, paid-sick or family-leave entitlements and pay-transparency requirements.
• Classify each worker correctly as an employee or independent contractor; incorrect classification can trigger back taxes, penalties and benefits liabilities.
• Issue a written offer or contract that sets out pay, hours, exempt/non-exempt status, benefits and any probation terms.
• Collect Form W-4 for federal withholding plus any state withholding forms, and complete Form I-9 eligibility verification.
• Register as an employer with the IRS (EIN) and with each state tax and unemployment agency before payroll begins, or partner with an Employer of Record (EOR) if you lack a U.S. entity.

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Employee Benefits

Mandatory Benefits

• Paid annual leave
• Paid public holidays
• Social insurance coverage
• Maternity and paternity benefits
• Certain allowances depending on sector or collective agreements

Leave policies:

• Annual Leave: Typically 20 working days (5-day week) or 24 days (6-day week), funded by either employer or leave fund depending on scheme.
• Sick Leave: Often provided through a mix of employer policy and social insurance benefits; not fully codified for all sectors.
• Maternity Leave: At least 18 weeks with social insurance benefits (if eligibility conditions met)
• Paternity Leave: Around 2 weeks paid leave for eligible fathers

Healthcare

Cyprus has a General Healthcare System (GHS), funded by employer and employee contributions.

• Access to public healthcare for covered individuals
• Many employers also provide private health insurance, especially for professional roles

Retirement Benefits

• Mandatory contributions to the Social Insurance Fund, covering pensions
• Many employers also offer occupational pension or provident funds, especially in financial and professional services sectors

Social Security Contributions (High-Level)

Employer

• Around 10–12%+ of salary (social insurance, GHS, redundancy fund, etc.)

Employee

• Around 8–10% of salary for social insurance and GHS (Percentages vary by year and scheme; confirm exact rates for 2026.)

Bonus & Incentive Programs

Common practices:

• 13th-month salary or Christmas bonus in some sectors
• Performance-based bonuses
• Sales commissions
• Allowances (e.g., car, meal, housing) depending on role

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Taxes in Cyprus

Cyprus has a progressive personal income tax with attractive regimes for certain foreign professionals.

• Lower–middle incomes may pay reduced or zero tax within thresholds
• Higher incomes subject to progressive rates, capped at a moderate top rate compared to Western Europe

Employees can access:

• Allowances (e.g., for social insurance contributions)
• Special expatriate reliefs in some circumstances

Always consult a tax advisor for current brackets and any expat incentives.

Payroll in Cyprus

• Payroll Frequency: Most commonly monthly
• Payroll Currency: EUR

Employers must deduct PAYE income tax and social insurance/GHS contributions and remit to the authorities on schedule.

Salary Payment Deadline

Typically at month-end or as agreed in the employment contract.

Declarations

• Monthly: Social insurance and GHS contributions, PAYE tax remittances
• Annual: Employer tax returns and employee certificates

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Legal Regulations

Key sources:

• Termination of Employment Law
• Social Insurance Law
• Protection of Maternity Law
• Minimum Wage Regulations
• Health and Safety legislation

Total Employment Cost

Employer's social contributions usually add 10–15% above the gross salary, depending on schemes applied.

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Work Permits & Visas for Cyprus

Non-EU/EEA citizens require appropriate work and residence permits.

Common options:

• Work Permit under Company Registration Scheme (e.g., for foreign companies headquartered in Cyprus)
• Specialist and executive permits

Typical Processing Time: Several weeks to a few months, depending on category.

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Employer of Record (EOR) Services in Cyprus

Employer of Record (EOR) services in Cyprus allow companies to hire local or foreign employees without establishing a Cypriot legal entity, making it easier and faster to build a compliant workforce on the island. An EOR manages all employment obligations while you focus on day-to-day operations and business growth.

An EOR in Cyprus helps you:

• Hire local or foreign workers in Cyprus without the need to open your own local entity
• Create fully compliant employment contracts aligned with Cypriot labor laws and regulatory requirements
• Run payroll and remit all taxes and social insurance contributions, ensuring accuracy and compliance
• Administer statutory and optional employee benefits, including social insurance, paid leave, and other mandated provisions
• Manage HR administration, onboarding, documentation, and ongoing employee support

With the EOR acting as the legal employer, you maintain full control over daily tasks, performance, and team management.

PEO Services in Cyprus

PEO services in Cyprus are ideal for companies that already have a registered entity in the country but want to streamline HR operations, simplify payroll, and ensure full compliance with Cypriot labour and immigration regulations. A PEO acts as an extension of your internal HR team, reducing administrative workload and operational risk.

For companies with a Cyprus entity, a PEO can manage:

• HR processes and documentation, including onboarding, employee records, contracts, and day-to-day HR support
• Payroll processing and benefits administration, covering salary calculations, tax deductions, social insurance contributions, and leave entitlements
• Compliance with labour laws and immigration rules, ensuring alignment with Cypriot employment regulations, mandatory filings, and foreign worker requirements
• Ongoing employee lifecycle support, from hiring to termination procedures

EOR in Cyprus

Payroll Calculator

A Cyprus payroll calculator helps you:

• Estimate net salary from gross
• Model tax, social insurance, and GHS deductions
• Understand total employer cost

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