Income Tax Exemptions on Employment in Cyprus
On 10 May 2022, the Cabinet of Ministers approved a new tax incentive scheme to attract foreign companies’ headquarters and talented, high skilled individuals in Cyprus.
Currently, non-residents of Cyprus who work in Cyprus and earn more than EUR 100,000 per year can benefit from 50% tax exemption on employment income for the first 10 years of employment.
- Under the proposed rules, the minimum wage required will be reduced from EUR 100,000 to EUR 55,000 per year, and the 50% tax exemption period will be extended from 10 to 17 years from the commencement of their employment in Cyprus.
- A grace period of two years will apply to this benefit where the employee’s initial wage starts below the minimum annual wage of EUR 55,000.
- The scheme will also apply to the current employees provided that they were resident abroad for 12 consecutive years prior to the commencement of their employment in Cyprus. In such circumstances, a six-month grace period will be implemented to meet the minimum annual wage requirement of €55,000.
The Government believes that this scheme is one of the most competitive of its kind in the European Union. There is already considerable interest, especially in high-tech companies, which have been relocating their headquarters to Cyprus in recent years.
The main goal of this new scheme is to promote the development of the technology sector in Cyprus, which is an important strategic goal for the Government.