NEW INCOME TAX EXEMPTIONS FOR EMPLOYMENT INCOME

On 26/07/2022, the Cyprus Income Tax Law of 2002 (Ν. 118(I)/2002) (the “Law”) has been amended through the Amending Law Ν. 121(Ι)/2022), with regards to the income tax exemptions for 1st employment1 in the Republic of Cyprus. Specifically, the Articles 8(21) and 8(23) of the Law cease to be available for employments commenced after the 26/07/2022 and the new Articles 8(21A) and 8(23A) have been introduced, as part of the Government’s strategy to attract and retain talented individuals to the Republic.

A. NEW INCOME TAX EXEMPTIONS INTRODUCED WITH ARTICLES 8(21A) AND 8(23A)

Article 8(21A):

• Individuals whose 1st employment in Cyprus commences after 26/07/2022 are eligible to a 20% tax exemption for remuneration from 1st employment or EUR 8,550 (whichever is the lower), provided that:

− they were not Cyprus tax residents for at least 3 consecutive years prior to their employment in Cyprus, and

− were employed outside of the Republic by a non-Cyprus resident.

• Period of exemption: 7 tax years, starting from the tax year following the year of employment commencement.