On 30^th June 2023 the Cyprus Parliament voted further amendments to Income Tax Law provisions of Article 8 (23A). The amendments are applied retrospectively from 1^st January 2022.

The tax relief for a person commencing employment in Cyprus is amended whereby the taxpayer should not have been resident in Cyprus for a period of 15 consecutive years prior to his/her employment, instead of 10 that was previously the law. The exception is applied for 17 years or until the abolishment of this section of the law, whenever occurs earlier, starting from the tax year first employed in Cyprus. The relief is provided to any year the income from employment in Cyprus is higher than €55.000 regardless the income at any point is reduced below €55.000, given that at the first or second year of employment in Cyprus the income was above €55.000 and the commissioner is satisfied that the change in remuneration is not intended to exploit the relief.

The 50% exemption on income tax is granted to individuals, who meet the conditions for the exemption, even if they change employer – the exemption was previously only granted for the first employment in Cyprus whereas change of employer resulted to termination of the exemption.

For the purposes of this paragraph, a person is considered to have a ‘commencement of first employment in the Republic’ when, for the first time, after a period of fifteen (15) consecutive tax years during which they did not engage in any salaried employment in the Republic, they commence engaging in salaried employment in the Republic either with an employer resident in the Republic or with a non-resident employer, and the term ‘first employment in the Republic’ is interpreted accordingly:

Furthermore, it is understood that, regardless of the year in which the first employment in the Republic commences, the provisions of this paragraph apply from January 1st, 2022, until the completion of a period of seventeen (17) consecutive tax years or until the abolishment of this paragraph, whichever occurs earlier, beginning from the tax year in which the first employment in the Republic commenced for an individual who has continuous employment in the Republic from the year of the commencement of their first employment up to and including the tax year 2021, and for a minimum period of fifteen (15) consecutive years immediately before the commencement of their first employment in the Republic, they were not residents of the Republic, and:

(i) benefited from the exemption provided for in paragraph (23) of Income Tax Law; or

(ii) whose first employment in the Republic commenced between the years 2016 and 2021, with a remuneration exceeding fifty-five thousand euros (€55,000) annually; or

(iii) whose first employment in the Republic commenced between the years 2016 and 2021, with a remuneration not exceeding fifty-five thousand euros (€55,000) annually and within a period of six (6) months from the date of publication in the Official Gazette of the Republic of the amending Income Tax (Amendment) (No. 6) Law of 2022, the remuneration exceeds fifty-five thousand euros (€55,000) annually:

Furthermore, it is understood that:

(i) in cases where the exemption provided for in this paragraph is granted, the exemptions provided for in paragraphs (21), (21A), and (23) of Income Tax Law are not granted;

(ii) the exemption is granted to each individual, once for their lifetime, for the years during which the provisions of this paragraph apply;

Furthermore, it is further understood that, irrespective of the other provisions of this paragraph, a person who was entitled to the exemption provided in accordance with the provisions of this paragraph before the date of publication of the Income Tax (Amendment) Law of 2023, continues to benefit from the exemption of fifty percent (50%) of the remuneration from the first employment, provided that the conditions of this paragraph are satisfied as they were in force before the date of publication of the Income Tax (Amendment) Law of 2023.