Taking up employment in Cyprus – exemption from Income TaxLora Stylianou
On 15 December 2020, an amending law was published in the Gazette with respect to Article 8(21) of the Income Tax Legislation. The purpose of the amendment is to expand the existing framework of attracting employees from abroad.
Individuals who take up employment in Cyprus and were not tax resident in Cyprus prior to commencing such employment, will be eligible for an exemption from taxation of 20% of their income or €8.550 (whichever is lower) from any employment which is exercised in Cyprus.
PROVISIONS UP TO 31 DECEMBER 2019 (pre-amendment). Under the old framework, qualifying individuals commencing employment in Cyprus from 2012 and onwards, can enjoy the exemption. The exemption can be claimed for a maximum period of five years, from 1 January following the year of commencing employment, up to tax year 2020.
NEW PROVISIONS AS OF 1 JANUARY 2020 (post-amendment). Under the new framework, the exemption continues to apply for a five-year period and is available to qualifying individuals commencing employment between 2012 and 2025. It is clarified that the exemption is provided in the five years that follow the year of commencing employment.