New Tax Benefits for Expatriates and High Net Worth Individuals Relocating to Cyprus

On 15 July 2022, the Cyprus House of Representatives voted in favour of a bill which replaces two of the existing income tax exemptions for employment income with new versions.

We outline below the new income tax exemptions, which are subject to conditions:

• New 50% exemption on remuneration will apply as from 1 January 2022, for first employments commencing as from 1 January 2022 exercised in Cyprus with remuneration exceeding EUR55.000 per year, by individuals who were not a resident of Cyprus for a period of at least 10 consecutive tax years immediately prior to the commencement of their employment in Cyprus.

• New 20% exemption on remuneration (up to a maximum amount of exemption of EUR8.550 per annum will apply for first employments commencing after the by individuals who immediately prior to the commencement of their employment in Cyprus were not a resident of Cyprus for a period of at least 3 consecutive tax years and were employed outside of Cyprus by a non-resident employer. For each individual the exemption will apply for a period of 7 years, starting from the tax year following the tax year of commencement of employment.

Conditions and period of the new 50% exemption across all the above categories of employment commencement date:

• The individual’s remuneration from employment in Cyprus must exceed EUR55.000 per year.
• The individual must be a non-resident of Cyprus for at least 10 consecutive tax years immediately prior to commencing employment.
• For each individual the period of the exemption is for 17 tax years from the tax year of commencement of first employment in Cyprus.

Conditions and period of the new 20% exemption across the above category of employment commencement date:

• Immediately prior to the commencement of their first employment in Cyprus, the individual must be a non-resident of Cyprus for at least 3 consecutive tax years and must be employed outside of Cyprus by a non-resident employer.
• For each individual the exemption will apply for a period of 7 tax years/calendar years, starting from the year following the year of commencement of employment.

The above amendments need to be published by the Office of the President of the Republic in the Cyprus Government Gazette in order to enter into force.