Cyprus amends incentives for Non-Resident Individuals Employed in Cyprus

The Cyprus government gazetted Law No. 51(I)/2023 on 30 June to bring into force amendments to the regime for non-resident individuals employed in Cyprus in respect of the 50% exemption of the remuneration from employment.

New, more favourable, income tax exemptions for employment income were introduced last July to attract highly skilled and high-earning foreign nationals to Cyprus, either as employees of a Cypriot entity or as employees of a non-Cypriot entity through remote working arrangements.

Income Tax (Amendment) (No. 6) Law of 2022 reduced the annual income threshold from €100,000 to €55,000 for individuals to claim the 50% exemption from tax for income provided for in articles 8(21) and 8(23) of the Income Tax Law in relation to first employment in Cyprus. It also extended the exemption from a maximum period of 10 years to 17 years.

To claim this exemption, the individual had not to have been Cyprus tax resident for at least 10 consecutive years prior to the commencement of the employment in Cyprus and the annual remuneration from employment in Cyprus had to exceed €55,000 in either the first or the second year of employment in Cyprus.

The main changes contained in the new amendment Law are:

• The non-tax residency requirement of the individual has been extended from 10 consecutive years immediately before the commencement of the individual’s first employment in Cyprus to a minimum of 15 consecutive years.
• The provision now applies to remuneration from any employment in Cyprus within the period of the 17 years, allowing individuals to change employment without a loss of exemption; previously it was limited only to the remuneration from first employment in Cyprus.

Individuals who were previously eligible for the 50% exemption from their first employment, based on the old provisions of Article 8(23A), will continue to benefit from the exemption provided that all the conditions, as they were in effect before the date of the publication of the Amending Law of 2023, are met.