On 26 July 2022 the new incentives in relation to first employment of individuals in Cyprus were published in the Official Gazette of the Republic of Cyprus and were introduced in the income tax legislation as part of a wider strategy of the Cyprus Government for attracting businesses and talented individuals from abroad.
As per the new provisions introduced under article 8(23A) of the income tax legislation, a 50% exemption for income in relation to first employment in Cyprus is now available for individuals with annual remuneration in excess of EUR55.000 (previous threshold EUR100.000). This exemption will be available for a maximum period of 17 years.
Individuals who are not eligible for the exemption under 8(23A) may take advantage of the new exemption introduced as per article 8(21A) of the income tax legislation, whereby 20% of the gross emoluments or an amount of EUR8.550 (whichever is lower), can be claimed as an exemption from salaries pertaining to first employment in Cyprus. This exemption is available for a maximum period of 7 years.
In addition, as per the new provisions introduced, individuals who have commenced employment in Cyprus prior to the date of enforcement of the abovementioned provisions and have been previously claiming an exemption under articles 8(21) and 8(23), may now be eligible to claim an exemption (subject to conditions) under article 8(23A) and therefore extend the duration of this exemption for the remaining of the available prescribed years (up to 17 years).
This is a very positive development, as Cyprus will now become a more attractive destination for relocation of highly skilled and high earning individuals, either as employees of a Cypriot entity or as employees of a non-Cypriot entity exercising their duties through a remote working arrangement (i.e. Digital Nomads).
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