We would like to inform you that on 15 October 2021 the Cyprus government presented its Action Plan for attracting companies to operate or expand their activities in Cyprus.
The implementation of the Action plan aims to create added value to the economy and also redefine the country’s development model.
A part of the Action plan relates to tax incentives which are described below
Tax incentives
Expansion of the existing tax exemption on 50% of employment income on first employment in Cyprus of a non-resident individual
The personal income tax exemption of 50% will be expanded to cover new Cyprus tax residents-employees with salaried income of €55,000.
Existing beneficiaries of the scheme should be able to extend the exemption from 10 to 17 years. Potential beneficiaries are individuals with income between €55,000 – €100,000 for the remaining period of 17 years.
Extension of the tax exemption for investment in innovative companies
Consideration of the possibility to grant the tax exemption of 50% for investment in certified innovative companies to corporate investors (The scheme that was in force until 30 June 2021 applied only to individuals).
Increased tax deductions for Research & Development (R&D) expenses
Granting an increased tax deduction on R&D expenses (e.g., by 20%). Eligible R&D expenses will be deducted from taxable income equal to 120% of the actual.
The legislation of the Action Plan regarding the tax incentives will be expected to be submitted to Parliament by the end of December and to be approved in the first quarter of 2022.
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
