On 15 July 2022, the Cyprus House of Representatives voted in favor for the replacement of the existing income tax exemptions for employment income.
We outline here below the new income tax exemptions:
- As from 1 January 2022, the “new” 50% tax exemption applies on remuneration for first employments exceeding EUR55.000 p.a., by individuals who were not a resident of Cyprus for a period of at least 10 consecutive tax years immediately prior to the commencement of their employment in Cyprus. The benefit can be enjoyed once in their lifetime for a period of 17 years. Subject to certain conditions, individuals whose employment commenced prior to 1 January 2022, may also be eligible to transition into the new 50% exemption.
- The “new” 20% exemption on remuneration (up to a maximum amount of exemption of EUR8.550 p.a.) will apply as from the Publication Date of the particular amendment of the Law , for first employments commencing after the Publication Date exercised in Cyprus, by individuals who immediately prior to the commencement of their employment in Cyprus were not a resident of Cyprus for a period of at least 3 consecutive tax years and were employed outside of Cyprus by a non-resident employer. The exemption will apply for a period of 7 years, starting from the tax year following the tax year of commencement of employment.
For those employees that do not meet the new conditions set for the “new” 50% exemption but are eligible for the existing 20% and 50% exemptions on employment remuneration, the benefit from the existing exemptions respectively will continue. The “old” 20% exemption for a total period of 5 years and the” old” 50% exemption for a total period of 10 years.
We are at your disposal for any clarifications.
Please contact:
George Yiallourides
Managing Director
T: +35725443132
E: yiallourides@ayca.com.cy
Panicos Charalambous
Director
T: +35725443132
E: panicos@ayca.com.cy