New Tax Exemptions For Employment Income

On 26 July 2022, an amending law was published in the Gazette with respect to the income tax exemptions for employment income, provided in Articles 8(21) and 8(23) of the Income Tax Law. 

The amending law was voted with regards to the government’s strategy to attract and retain foreign talent to Cyprus.

The existing exemptions (Article 8(21) & Article 8(23)) will no longer be available for employments commencing after 26 July 2022.

What the new exemptions provide?

New article 8(21A)

As from 26 July 2022, 20% of the remuneration of employees (up to a maximum amount of exemption of €8.550 per annum), whose first employment in Cyprus commenced from 26 July 2022 onwards, is exempt from income tax for a period of seven years, provided the employees, immediately before the commencement of their employment in Cyprus:

  • were not residents of Cyprus for a period of at least three consecutive tax years, and
  • were employed outside of Cyprus

The exemption will be first granted in the tax year following the tax year of commencement of employment.

It is important to note that the law does not require the individual to become a Cyprus tax resident to benefit from the new 20% exemption, nor the employer to be a Cyprus tax resident employer.

New article 8(23A)

As from 1 January 2022, 50% of the income of employees, whose first employment in Cyprus began from 1 January 2022 onwards, is exempt from income tax for a period of 17 years, provided that their income per year exceeds 55,000 and the employees were not residents of the Republic for a period of at least 10 consecutive years.

The first employment in the Republic starts from 1 January 2022 onwards and the period of 17 years starts from the month of employment in Cyprus.

Individuals whose employment began before 1 January 2022, may also qualify for the new 50% exemption if they meet requirements.

2016 – 2021 (Date of Commencement)

  • Employees whose income at commencement of first employment in Cyprus exceeded €55.000 p.a. or
  • Employees whose income at commencement of first employment did not exceed €55.000p.a., and within 6 months from 26 July 2022 their remuneration exceeds €55.000 p.a.

Up to 2021 (for existing beneficiaries)

  • Existing employees who benefitted from the existing 50% exemption and have continuous employment in Cyprus up to and including 2021


What else you need to know?

  • “Commencement of first employment exercised in Cyprus” is defined as when an individual first performs salaried services in Cyprus (for a resident or non-resident employer), without taking into account occasional full or part-time employment in Cyprus for a period not exceeding a total of 120 days in a tax year.
  • For each individual the exemption will apply once in their lifetime for a period of 17 years, starting from the tax year of commencement of first employment in Cyprus
  • Τhe exemption is granted for any year in which the remuneration from employment in Cyprus exceeds €55,000, regardless of whether in any tax year the remuneration is reduced below €55,000, provided that in the first or second year of employment in Cyprus the remuneration exceeded €55,000 p.a. and the Commissioner is satisfied that the fluctuation in the annual remuneration is not an arrangement put in place with the purpose of obtaining the exemption.
  • The exemption is granted in the tax year of commencement of first employment, provided that the remuneration from first employment in Cyprus in the first 12 months exceeds €55,000, as well as during the tax year of termination of employment in Cyprus or the termination of the period of 17 years, provided that the remuneration from employment in Cyprus during the last 12 months exceeds €55,000.
  • Similarly with the 20% exemption, it is not required for the individual to become a Cyprus tax resident to benefit from the new 50% exemption, nor for the employer to be a Cyprus tax resident employer.
  • Individuals who are granted this exemption cannot be granted the exemptions provided in articles 8(21), 8(21A) or 8(23) mentioned above.


It is expected a further guidelines to be issued by the Cyprus Tax Authority.

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New Tax Exemptions For Employment Income
New Tax Exemptions For Employment Income
New Tax Exemptions For Employment Income