The long-anticipated tax incentives offered to individuals in relation to first-time employment in Cyprus were published in the Official Gazette of the Republic of Cyprus on 26 July 2022.1 The new incentives introduced in the income tax legislation are part of a wider strategy of the Cyprus government for attracting businesses and talented individuals from abroad.
Under the new provisions introduced under Article 8(23A) of the income tax legislation, a 50-percent exemption from tax for income in relation to first-time employment in Cyprus is now available for individuals with annual remuneration in excess of €55,000 (down from the previous threshold of €100,000). This exemption will be available for a maximum period of 17 years.
Individuals who are not eligible for the 50-percent exemption may take advantage of the new exemption introduced in Article 8(21A) of the income tax legislation, whereby 20 percent of the compensation or an amount of €8,550 (whichever is lower), can be claimed as an exemption from income tax on compensation from first-time employment in Cyprus. This exemption is available for a maximum period of seven years.
In addition, under the new provisions, individuals who began employment in Cyprus prior to the effective date of the new incentive provisions and who have previously claimed an exemption under Articles 8(21) or 8(23), may now be eligible to claim an exemption (subject to conditions) under Article 8(23A) that would extend the duration of the exemption for the remainder of the available prescribed years, up to 17 years.