The Average Cost of Living in Cyprus

Cyprus is a popular destination for foreign nationals – not least with British expatriates looking for a mild climate, low living costs and advantageous tax structures.

The island provides a typically laid-back Mediterranean lifestyle, high schooling standards and 320 days of annual sunshine alongside an internationally focused business sector.

With English widely spoken across North and South Cyprus, the country attracts professionals and families from across Europe. However, understanding the true cost of living and tax implications is essential to planning a smooth, financially secure relocation.

Cost of Living in Cyprus

The island is divided into two republics – the Republic of Cyprus in the south and the Turkish Republic of Northern Cyprus in the north. There is a zone called the Green Line, created by the UN, which runs between the countries, although EU citizens and foreign nationals with valid visas can usually travel freely across.

For the purposes of this article, we will focus on the Republic of Cyprus, which makes up the southern area of the island and is an EU nation.

There are several reasons this region is favoured by global expatriates:

• Multiple double tax treaties with other countries, including the UK.
• The advanced infrastructure and well-developed amenities.
• A dynamic, prosperous economy and greater presence of multinational businesses.

Living costs are similar to those of other countries in southern Europe and considerably more affordable than Britain, with low property prices and inexpensive local shopping.

Comparing Costs of Living in Cyprus vs the UK

Nicosia, the capital, is one of the most expensive places to live along with other major cities such as Limassol and Paphos. Overall, even the larger metropolitan cities are considered less costly than the UK.

Numbeo collates average national living costs and reports that in Cyprus:

• Consumer goods cost 10% less than in the UK.
• Rental properties are 20.7% less expensive.
• Restaurant prices in Cyprus are 14.3% lower.
• Groceries cost 10.5% less.

Of course, other considerations that will impact your budget include factors such as whether you are working or retired and whether you have private healthcare coverage.

Employees and pensioners normally contribute 2.65% of their income to the Cypriot National Health Insurance System, with employers adding a 2.9% contribution. Deductions are capped on incomes over €180,000, and participants can access standard medical services with capped contributions towards healthcare and medications per year for any treatments required.

Visas and Residency Permits in Cyprus

EU citizens can relocate to Cyprus with minimal paperwork, but UK nationals and those from other non-EU countries will need a visa or permit to live and work in the country.

Travellers and tourists can visit for 90 days without a visa but will need to undergo a fairly complex residency application for an extended or permanent stay – this may mean applying for an MUK1 temporary residence permit and then proceeding with a longer-term application.

The Cypriot citizenship by investment scheme was scrapped in 2020 following EC criticisms and allegations of potential tax evasion. Still, the revised programme, updated in May 2023, enables foreign nationals to apply for residency.

Eligibility requirements include:

• Buying a new-build property for €300,000 or above, plus applicable taxes, or making an alternative eligible investment for the same minimum value.
• Providing evidence of an annual income from outside of Cyprus of €50,000 per year, plus an additional €15,000 for a spouse and €10,000 for each dependent child. Note that the reformed visa scheme does not allow applicants to include parents.
• Verifying that the applicant will not be employed in Cyprus (although they can own a Cypriot business and receive dividends).
• Having a clean criminal record and proof of private healthcare insurance.
• Visiting Cyprus within one year of receiving a permit to submit biometric data and at least once every two years thereafter.

Qualifying property investments can include several smaller properties, a mixture of commercial and residential properties or a home bought to rent out – but must be new build properties purchased from a developer.

Please download your complimentary copy of our Cyprus Residency Guide for further information.

Taxes for Expats Living in Cyprus

The Cypriot taxation system has a personal allowance, similar to the UK structure, set at €19,500, with income tax payable at a maximum of 35% on income above €60,000.

Income tax works on bands and is currently payable as follows:

• Up to €19,500 – 0%
• €19,500 – €28,000 – 20%
• €28,000 – €36,300 – 25%
• €36,300 – €60,000 – 30%
• €60,000 and above – 35%

Expats who own a business normally pay 12.5% Corporation Tax on company profits plus a 2.5% tax on any royalties linked to Intellectual Property located in Cyprus.

Cypriot Pension Tax

Retirees with pension income arising from overseas can choose how their retirement income is treated:

• Option one: fixed tax rate of 5% on all pension income over €3,420.
• Option two: income tax according to the relevant tax band tier.

Choosing wisely could significantly impact your net income, and retirees can switch between tax treatments every year if they wish to, which affects the amount of tax-free income they can earn.

The table below illustrates how these two tax options compare:

Cyprus also has a specific tax status called non-domiciled tax residency, which applies to foreign nationals who relocate to the country and become tax residents – provided they have not previously been tax residents in the last 20 years.

This status allows expats to be exempt from capital gains tax and ineligible for social security defence contributions on their income.  If you live in Cyprus for more than 183 days per year and qualify as a non-domiciled tax resident, bank interest and share dividends also become tax-free.

We recommend you seek financial advice if you need assistance selecting the optimal tax treatment or determining whether you qualify for this tax status.

Guidance on Calculating the Cost of Living in Cyprus

As we have seen, the costs of living in Cyprus do not solely relate to average expenditure on utilities, groceries, and accommodation but are affected by tax bands, income sources, your visa category, and where your earnings originate.

For more information about the average costs of living in Cyprus, investing in Cypriot property or registering for the correct tax rates, please contact Chase Buchanan for independent professional support.

*  Updated May 2024