Michalis Parides
The legislative proposal for a new tax incentive scheme (the “Scheme”) which was part of the Cyprus government strategy for attracting companies and talent from abroad, was approved by the Cabinet of Ministers on 10th of May. The new Scheme aims at cementing the high momentum of companies headquartering on the island and to attract talent from abroad.
Under the previous tax incentive scheme, non-domiciled employees working in Cyprus with annual employment remuneration of more than EUR 100,000 could benefit from a 50% tax exemption for the first 10 years of employment.
The new Scheme expands the tax benefits applicable to individuals who were residents outside Cyprus before the commencement of their employment. The main provisions are the following:
- The threshold for the annual remuneration is reduced from EUR 100,000 to EUR 55,000 on which 50% tax exemption applies.
- The tax exemption period is extended from 10 to 17 years from commencement of employment.
- The abovementioned tax benefits will be applied retrospectively to current eligible employees with annual remuneration of more than EUR 55,000.
- New and existing employees will benefit from the tax exemption provided that they resided abroad for 12 years before commencement of employment in Cyprus.
- New employees will benefit from a two-year grace period and existing employees from a six-month grace period to meet the qualifying criteria of the Scheme.
* This publication has been prepared as a general guide and for information purposes only. It does not purport to be comprehensive or to render professional advice. Before making any decision or taking any action that may affect you and/or your business, bespoke advice should be obtained.
