Cyprus: Extension of income tax exemption for employment in Cyprus

On 15 December 2020, the amending law of Article 8(21) of the Cyprus Income Tax law, was published in the Government Gazette. 

The purpose of this amendment was to extend an income tax exemption, expiring on 31 December 2020, for not Cyprus tax resident individuals.

In particular, the exemption from Income Tax of the lower of €8.550 and 20% of the remuneration arising from employment in Cyprus was extended for employment that commences up to 2025. The exemption can be claimed from 1 of January following the year of the commencement of the employment for a maximum of 5 years.

Qualifying individuals are those who were resident outside Cyprus the tax year before the year of commencement of employment in Cyprus.

50% exemption of high-net-worth individuals 

In addition to the above exemption, the 50% tax exemption still applies for individuals with employment income exceeding €100.000 per annum and can be benefited for a period of 10 years from the year of employment. 

An individual may be entitled to one, but not both simultaneously, of the two exemptions. 

Cyprus Income tax rates 

Cyprus tax residents are liable to Cyprus tax on their worldwide income. The current Cyprus income tax rates are the following:

Any individuals which are only Cyprus tax residents but not Cyprus domiciled are exempted from the Special Defence Contribution which is imposed on certain types of income such us dividends, interest and rents.

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