Further to our tax announcement regarding the Amendments of the Income Tax Law for Article 8(23A) published on 26 July 2022, also additional amendments was published in the Official Gazette of the Republic of Cyprus on 30 June 2023 regarding to the 50% income tax exemption for employment income.
Article 8(23A) provides a 50% exemption from income tax on the employment income of the eligible non-Cyprus tax resident individuals (subject to conditions).
The amendments are summarized below:
- The exemption granted to individuals who were non-Cyprus tax residents for at least 15 consecutive years immediately before the commencement of their employment in Cyprus (previously was 10 years).
- The term “first employment” was replaced with the term “any employment” which allows the individual to continue to benefit from the 50% exemption even if they change an employer within the period if 16 years. (previously the exemption was granted only on the employment income from the first employment)
- The exemption is granted for 17 years from the date of employment or until the relevant article is revoked.
The amendments have retrospective effect from 01 January 2022 and, apply to the transitional rules that were initially introduced in Article 8(23A) when the legislation was published in the Official Gazette of the Republic on 26 July 2022 (i.e., for employments prior to 2022).
Individuals who are not eligible of the 50% exemption from the rules of the new Article 8(23A), but were eligible for the exemption provided in the old rules of Article 8(23A), can continue to benefit from the provisions of the old Article 8(23A) if they met the applicable conditions.
New rules Vs Old rules
| Employment eligible for the exemption | Exemption rate | Employment income | Period of exemption | Non-Cyprus tax residency period prior to commencement of employment | |
| 8(23A) – until the publication of the new rules (as per old provisions) | First employment in the Republic (from 1 January 2022 until the publication of the amendments to Article8 (23A)) | 50% on employment income in the Republic |
More than 55,000 EUR |
17 years from the year of first employment (or until termination of the first employment) |
More than 10 years and lower than 15 years |
| 8(23A) – after the publication of the new rules
|
Any employment in the Republic (from 1 January 2022 and onwards) | 50% on employment income in the Republic |
More than 55,000 EUR |
17 years from the year of employment |
More than 15 years |
Transitional Provisions
| Individuals that were eligible to Article 8(23) | Employment during the years 2016-2021 with employment income>55,000 EUR | Employment during the years 2016-2021 with employment income<55,000 EUR which it is increased to >55,000 EUR up to 26 January 2023 | |
| 8(23A) – until the publication of the new rules (as per old provisions) |
Exemption applies only on remuneration from first employment in the Republic for a period of 17 years from the year of the first employment or until termination of the first employment |
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| 8(23A) – after the publication of the new rules
|
Exemption applies only on remuneration from any employment in the Republic for a period of 17 years from the year of the employment
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For any further clarifications you may require, please do not hesitate to contact
Gabriel Ioannou Andri Andreou
g.ioannou@ith.com.cy a.andreou@ith.com.cy
+357 22050530 +357 22050626
