Jul 26, 2022
New income tax exemptions on employment income in Cyprus
On 26th July 2022, amendments have been published in the Official Gazette of the Republic of Cyprus regarding the new income tax exemptions on employment income in Cyprus.
The amendments under Articles 8(21) and 8(23) of the Cyprus Income Tax Law, L.118(I)/2002 include:
- Definition of first employment, i.e. incentives apply to individuals employed in Cyprus for the first time, as follows: i) an individual is considered to have first employment when he/she works on a salaried basis for an employer that is a resident or a non-resident of the Republic of Cyprus; and ii) the definition does not take into account occasional full or part-time employment that does not exceed 120 days overall in a tax year.
- Tax exemption of 20% for an individual employed for the first time in Cyprus after 26th July 2022, who was previously not resident in Cyprus, and for a period of 3 consecutive years prior to commencing employment in Cyprus was employed by a non-resident employer and was residing outside Cyprus, up to a value of €8,550 for a period of 7 years; or
- A tax exemption of 50% for an individual employed for the first time in Cyprus as of 1st January 2022, who was previously not resident in Cyprus for a period of at least 10 consecutive years and receiving an annual salary of at least €55,000 for a period of 17 years, subject to conditions.
- Provisions apply as follows: i) only one of the above may be claimed at any time (from both existing and new incentives); and ii) 50% tax exemption may be applied also by individuals whose first employment in Cyprus commenced between the years 2016 and 2021 with remuneration that exceeded €55,000 annually, or with remuneration that did not exceed €55,000 annually and until 26th January 2023, the remuneration exceeds €55,000 annually.
For more information on new income tax exemptions on employment income in Cyprus and how this may affect you, please contact us on [email protected]