Companies, wherever they are based, must pay the salaries of their employees in a timely manner. They must also ensure their income tax and social security compliance in terms of withholding, calculations and reporting. Every country’s employment and tax system is different.
Any organisation entering a foreign market faces a number of employment and tax related challenges. By outsourcing your payroll you can free up your valuable time and resources to concentrate on the important business of running your company while making certain that all obligations and responsibilities are met in a timely and efficient manner in every jurisdiction of operation.
Sovereign Trust (Cyprus) offers a full range of payroll services to companies that have employees in Cyprus and need assistance in the preparation of their monthly payroll, Permanent Resident Permit for EU Citizens (‘Yellow Slip’), obtaining and maintaining work permits in Cyprus and many other payroll and HR-related tasks.
Cyprus employment legislation
Employers are obliged to inform an employee in writing, within one month after commencement of the employment, of the essential conditions applicable to his/her contract of employment or employment relationship in respect of the following legislation:
- Employment Contract or Relationship Laws of 2000 and 2007
- Organisation of Working Time Laws of 2002 and 2007
- Protection of Wages Law of 2007
- The Fixed-Term Work Laws of 2003 and 2007
- The Part-time Work Laws of 2002 to 2007
- Maternity Protection Law
- Redundancy Law
- Termination of Employment Law
Employers must also take account of the following EU Directives in respect of employment in Cyprus:
- Working Time Directive (WTD)
- Data Protection Directive
- Acquired Rights Directive
Cyprus Income Taxes and Social Insurance
Employers are obliged to register to Social Insurances and pay Social Insurance Contributions for all their employees based on their Gross Salary (including bonuses and benefits in kind) on a monthly basis.
Additionally they must withhold Social Insurance Contributions, Income Tax (PAYE) and Special Contribution Tax from the gross salaries of employees. Employers need to calculate PAYE and Special Contribution Tax in January every year using the employee’s income declaration.
Maintenance of proper records
Employers in Cyprus should maintain certain documents regarding employees such as their employment contract, copy of their ID/Passport, residential address and telephone number, tax number, Social Insurance number and Yellow/Pink slip for foreigners.
Employers are also required to keep signed weekly/monthly payslips, IR.59 forms and IR.63 forms and record any absence from work.
Health and Safety
It is important to consider the rights and obligations regarding the health and safety in the workplace. A safe and healthy environment can add value to your business and will not only assist you to attract quality employees but also to increase their efficiency and retention.
Sovereign Payroll Services
Sovereign Trust (Cyprus) can provide a comprehensive but flexible outsourced payroll service that is tailored to each client’s specific requirements. The first stage will involve registering the employer and its employees with the local tax office and the government employment department, recording employment notices and contracts, obtaining bank details of the employer and employee, issuing tax codes and, finally, inserting all that information into the Sovereign payroll system.
Thereafter, on a monthly basis, Sovereign’s payroll services will facilitate:
- Computing employees’ withholdings and net pay
- Ad hoc additional payments or deductions
- Producing and issuing employee pay slips
- Direct deposit pay into employee bank accounts
- Expenses and benefits processing and compliance
- Arranging documentation for new or departing employees
- Preparing revenues payable and remittance submissions to tax office
Year-end procedures will also encompass the preparation of tax returns for both the employer and employees and compiling payroll accounting records for the employer.
In addition, through Sovereign Group’s wider offering, we are able to provide private medical insurance and occupational pensions plans, which can be integrated into the payroll services system.