The Cyprus Government has recently introduced further tax incentives for employees moving to Cyprus for work and in particular for Employees of Foreign Interest Companies which choose Cyprus as their Headquartering base.

These incentives have been introduced in addition to the simplification of Immigration procedures and the introduction of new Visa Schemes, such as the Digital Nomad Visa. 

In particular, employees relocating from abroad and taking up their first employment in Cyprus will enjoy certain tax deductions and benefits, lowering the Personal Income Tax payable from their employment in Cyprus. 

20% Income Tax Exemption 

A 20% exemption (up to a maximum of €8,550) on Personal Income Tax payable for remuneration from employment will be granted to individuals who take up their first employment in Cyprus after 26^th July 2022, subject to the following:

• During the 3 years (i.e., 36 months) immediately preceding his/her employment in Cyprus, the individual should have been employed outside of Cyprus by a non-Cyprus resident employer, and
• The individual’s annual remuneration does not exceed €55,000.  

The exemption is granted for a 7-year period and can be claimed during the following year of the commencement of employment in Cyprus.

50% Income Tax Exemption: Annual Income Greater than €55,000

Further to the above, a 50% exemption on Personal Income Tax payable for  remuneration from employment will be granted to individuals who take up their first employment in Cyprus after 1^st January 2022, provided that:

• The individual was not a Cyprus resident for a period of at least 10 consecutive years prior to his/her first employment in Cyprus, and
• The individual’s annual remuneration exceeds €55,000.

For the purposes of this regime, Remuneration from Employment includes non-salary benefits as well (such as bonuses or dividends linked to employment) and may exceed the minimum €55,000 threshold during the 1^st or 2^nd year of employment in Cyprus.

This exemption is granted for a 17-year period and can be claimed during the following year of the commencement of employment in Cyprus.

Also eligible for this exemption are individuals who commenced their first employment in Cyprus between 2016-2021 with an annual remuneration of less than €55,000 and whose annual remuneration exceeded the amount of €55,000 within 6 months from 26/07/2022. 

Other Considerations

• Individuals may claim only one of the two schemes at a time. 
• Individuals that would generally be eligible for the 50% exemption but who do not qualify for the said exemption during a particular tax year (i.e. because their employment income during that year is below €55,000), may still claim the 20% exemption for that particular year.
•  Either of the exemptions may be also granted to individuals employed by companies related to them (unless the activities of the employer company do not justify the payment of such remuneration).
• Spouses of Individuals relocating from Non-EU Countries to Cyprus for Work may also be granted access to the Cyprus Employment Market (depending on the terms of their Spouse’s Visa). 

Looking to relocate your team to Cyprus? Contact our team at info@paraschou.com.cy.