Employment in Cyprus

14 January, 2021

Employment in Cyprus – Extension of the income tax exemption of €8,550 or 20% (whichever is lower) with respect to Article 8 (21)

On 15 December 2020, the Gazette amended the law with respect to Article 8 (21) of the Income Tax Legislation. This amendment aims to attract employees from abroad and to expand the current framework.

Article 8(21) allows a five-year exception from income tax of the lower of:

  • EUR 8.550
  • 20% of the remuneration arising from employment in Cyprus

for people that were not tax residents in Cyprus prior to the year of the beginning of their employment. The five-year exception starts in the year that follows the beginning of their employment in Cyprus. Before the amendment of the law, the last year for this exception was 2020.

The new amendment extends the exception up to employment that begins in 2025, while the duration of the exception an individual can receive remains the same; that is, five-years.

To illustrate, an individual who commences employment in Cyprus in 2025 will be eligible to claim the relevant tax exception for 2026-to-2030.

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