On 26.07.2022, new amending provisions under Articles 8(21) and 8(23) of the Income Tax Law have been published in the Official Gazette of the Republic of Cyprus, which establish 50% tax exemption for the first employment income under certain conditions:
- Prior to the commencement of employment in Cyprus, the employee should not be a tax resident in the Republic of Cyprus for at least 10 consecutive years and their annual remuneration should exceed 55.000 EUR.
- Under Article 8(21A) of the Income Tax Law, 20% of the remuneration of the individuals, who started their first employment from 26.07.2022 onwards is exempt from income tax for seven years, if the employees were not residents of Cyprus for at least three consecutive years. Individuals will not be able to utilize this exemption, in case if they already applied for 50% exemption.
It should be noted that the exemption could be utilized for a period of 17 years, starting from the tax year of first employment. The first employment in the Republic of Cyprus should start from 01.01.2022 onwards.
Additionally, it is not required neither for an employee nor for an employer to be a Cyprus tax resident.
Other categories, who can benefit from the new amendments:
- Employees, who commenced their employment in Cyprus between 2016-2021 years with annual remuneration less than 55.000EUR and within 6 months starting from the date of publication of the new amendments in the law (26.07.2022), their annual salary exceeded the threshold of 55.000 EUR;
- Employees, who prior to the new changes, benefited from the provisions of Article 8(23) and had continuous employment in the Republic of Cyprus up to 2021 year.
