As of May 10th 2022, a new tax incentive program has been authorized by the Cabinet of Ministers and has been put in practice, aiming to attract International companies and individuals to invest in Cyprus. As per the previous scheme, individuals who took up employment in Cyprus were entitled to the following exemptions:
Lower of 20% of remuneration and €8.550 from any employment in Cyprus by an individual who was resident out of Cyprus before the commencement of employment was exempt from tax. This benefit was provided for a period of 5 years with an expiration date in 2025
50% of remuneration from employment exercised in Cyprus (when exceeding €100.000) by an individual who was resident out of Cyprus before the commencement of employment. This benefit was provided for a period of 10 years.
As per the new law, the above schemes will be amended as follows:
As of 26 July 2022, the 20% or €8.550 rule, will be provided for seven years, for individuals whose first employment in Cyprus commenced from 26 July 2022 onwards. Individuals are eligible to claim this benefit if they were previously living outside Cyprus and were employed by a non-resident for at least a period of 3 consecutive years. Individuals who met the conditions of this exemption before 26 July 2022 will continue to benefit for the relevant five year period.
As from 1 January 2022, 50% of the remuneration of employees whose first employment in Cyprus commenced from 1 January 2022 onwards, will be exempt from income tax for a total period of 17 years. Individuals are eligible for this benefit if they earn more that €55.000 per annum and were not residents of Cyprus for a period of at least 10 consecutive years immediately before the commencement of employment in Cyprus.
For individuals earning more than €55.000 per annum and whose employment commenced before 1 January 2022, they are eligible to the 50% exemption in the below cases:
For employees whose date of commencement of first employment in Cyprus is between 2016 and 2020 they are entitled to the benefit if their remuneration was in excess of €55.000 upon commencement of employment, or for employees whose remuneration did not exceed €55.000 upon commencement of employment and within 6 months from 26 July 2022 their remuneration exceeds the €55.000 threshold per annum.
For existing beneficiaries of the plan who commenced employment up to 2021 they will continue to receive the benefit
According to Government statements, this scheme is one of the most competitive schemes in the EU, and has attracted a large number of businesses especially in the tech industry that have recently moved their headquarters and operations to Cyprus. These amends in the new scheme aims to support the island’s growth especially in the technology industry, which the Government sees as a long term potential opportunity!
If you require more information regarding the new Income Tax Exemptions in Cyprus, do not hesitate to contact the ELSAVCO team on 22 811 900 or visit our website to see other services we can offer. We focus on working with you in order to assist you in business development and entrepreneurial growth.