Form TD59: Claim for Allowances – 2025 Tax Year, Cyprus

The Cyprus Tax Department has issued Form TD59 – Cyprus tax allowances, titled “Claim for Allowances” for the 2025 tax year. This form is essential for both employers and employees to ensure accurate tax withholding and compliance.

Responsibilities of Employers

Employers are required to distribute Form TD59 – Cyprus tax allowances – to all employees at the beginning of each tax year. Employees must complete and return the signed form. Employers should retain these forms in their records, as they may be requested by the Tax Department for verification purposes.

Employee Obligations

• Tax-Resident Employees: Must declare their worldwide income and any deductions they wish to claim.
• Non-Tax-Resident Employees: Should declare only their Cyprus-sourced income and relevant deductions.

Why Form T.D.59 Matters for Proper Tax Withholding

Form T.D.59 plays a key role in ensuring that the correct amount of tax is deducted from an employee’s salary throughout the year. By accurately declaring income sources, personal allowances, and deductible expenses, employees help employers apply the correct PAYE rate and avoid significant year-end adjustments. Incorrect or incomplete forms may result in underpayment or overpayment of tax, which can create administrative complications and possible penalties.

Common Allowances and Deductions Employees May Declare

Employees can use Form T.D.59 to notify their employer of allowable deductions such as social insurance contributions, GHS (General Healthcare System) contributions, approved pension fund contributions, and life insurance premiums (subject to statutory limits). These deductions can reduce taxable income and must be supported by proper documentation. Employees should review their personal circumstances annually to ensure all eligible deductions are correctly reported.

Guidance on Residency Status

Correctly identifying whether an individual is tax-resident in Cyprus is essential for accurate completion of the form. Cyprus applies the 183-day rule and the 60-day rule when determining tax residency. Employees who meet either test are treated as tax residents and must declare worldwide income on the form. Non-residents should report only Cyprus-sourced employment income and any applicable deductions.

Accurate completion of this form is crucial for proper tax assessment and to avoid potential penalties.

For further assistance or clarification on Form T.D.59 or other tax-related matters, please contact us.