🌟 Tax Exemption Scheme for Foreign Employees in Cyprus

The Cyprus government has introduced an attractive tax exemption to encourage foreign employees to work in Cyprus! Here’s what you need to know:

What is the Scheme?

Exemption: 20% or €8,550 (whichever is lower)
Applicable To: Individuals taking up their first employment in Cyprus
Eligibility: Employment after July 26, 2022
Annual Salary Limit: Less than €55,000
Maximum Duration: Up to 7 years

Legislative Background

On July 14, 2022, the House of Representatives passed amendments to the Income Tax Law (ITL) in Cyprus, including:

Exemptions: 20% or 50% from income tax for first-time employees
New provisions under Articles 8(21A) and 8(23A) detailing specific conditions for exemptions.
Circular 10/2022: Clarifies these exemptions and provides practical examples.

Key Clarifications in the Circular:

Definitions: What constitutes “First Employment” and “Remuneration.”
Contract Requirement: No formal contract is needed.
Probation Periods: Counted towards the 120 days threshold.
Multiple Employments: Exemptions apply only to the first employment.

Important Note for Eligibility:

Individuals will qualify as employed outside Cyprus if they worked for a foreign employer exclusively outside Cyprus for the 36 months leading up to their employment start date in Cyprus.

💡 Need Assistance?

This post is for informational purposes only and is not a substitute for professional advice. For further information or assistance, consult our tax experts!