The Cyprus government passed new tax incentives on 26 July 2022.
The scheme is along with the One Stop Shop, and the granting of visas and work permits to the spouses of professionals that relocate to Cyprus was at the forefront of the government strategy to attract more foreign business to Cyprus.
The new exemption allows the following:
As from 1 January 2022, 50% of the remuneration of employees whose first employment in Cyprus began on, or after, 1 January 2022 are exempt from income tax for a period of 17 years, provided that their annual remuneration exceeds €55,000, and the employees were not residents of Cyprus for a period of, at least, 10 years before the commencement of their employment.
The exemption is granted for any year in which the remuneration from employment in Cyprus exceeds EUR 55,000, regardless of whether in any tax year, the remuneration is reduced below EUR 55,000, provided that in the first or second year of employment in Cyprus the remuneration exceeded EUR 55,000 per annum.
In certain cases, this exemption can also be applicable to Individuals who previously benefited from the provisions of the previous rules) and had continuous employment in Cyprus up to 2021. Also, individuals who commenced their employment in Cyprus between 2016-2021 tax years, with annual remuneration above €55.000 can also benefit from the new exemption.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.