An amendment of article 8 (23A) of the Income Tax Law 2002 was published on 30^th June 2023 in the Official Gazette of the Republic of Cyprus with a retrospective application beginning from 1 January 2022. 

• First employment – New Definition 

The amending law introduced conditions for the provision of 50% exemption from income tax for individuals who can satisfy the first employment in Cyprus. More specifically, the provision of article 8 (23A) re-defines the term “first employment” to be relevantly more flexible in terms of fulfilment. According to the amended version of the Article, one is eligible for the 50% exemption if they have not worked in the Republic for a period of 15 consecutive tax years, broadening effectively the scope of the eligibility to include people who had worked in the Republic in the past. 

Whereas, according to the previous version of the Article, one was eligible for the exemption if they had never worked in the Republic of Cyprus  or provided salaried services to an employer in the Cyprus -residing in the Republic or not- not including of course any job, part-time or full-time, not exceeding 120 days. 

Another very interesting aspect brought by the amended version of the Article, is the fact that the eligibility in question is reached even if the interested party has altered employers during the aforesaid 15 years. Before the change in legislation, in order to be eligible one must have been employed by the same employer for the required period. 

• First Employment – Tax Residency 

Moving on to tax residency, according to the previous Article, in order to satisfy the criteria for the exemption, one should not had been a tax resident of the Republic for a period of at least 10 years before the beginning of the first employment. With the change in legislation, the abovementioned period has been increased from 10 to 15 years. 

• Amount of Remuneration and Time Limit of Exemption 

Moreover, one is eligible for the exemption if their annual remuneration from employment in Cyprus is in excess of €55,000. It is also worth noting that the exemption in question is available for 17 tax years or until the provision in legislation is revoked. 

Finally, the new version of article 8 (23A) of the relevant Law also provides for individuals who began first employment prior to 2022 and provided that some criteria are fulfilled, they can also benefit. 

Our team can provide guidance in the above matter and help distinguish eligibility. For more details, do not hesitate to contact us at info@multilysis.com.