Tax incentives for highly qualified foreign professionals in Cyprus
On July 14, the Cyprus Parliament approved important amendments to the Income Tax Law.
Innovations provide for the provision of the following tax benefits to highly qualified foreign specialists:
- Employees who have been hired by Cypriot companies from 1 January 2022 will now be exempt from paying taxes at a rate of 50% for up to 17 years.
The minimum required annual salary has been reduced from 100,000 euros to 55,000 euros. An important condition is not to be a resident of Cyprus for at least 10 years before starting work in a Cypriot company. Those who come to work in Cyprus and were offered less than 55,000 euros a year will have two years to bring their salary up to the level at which a 50 percent tax deduction begins to take effect.
- Island-based employees working in international business from 2016 to 2021 will also be able to extend benefits from 10 to 17 years.For employees of foreign companies who receive less than 55,000 euros per year, there will be a transitional period.For persons already working in Cyprus, this period will be six months, starting from July 14, 2022.For those who have been resident in Cyprus for at least 10 years prior to starting employment in the country, a 50% tax credit will accrue for up to 17 years.
- If a foreigner is a resident of Cyprus for at least 10 years before starting work in a new company, while already working in the country and enjoying a 50% tax benefit, then he will be able to continue to use it for a maximum of 10 years.
- Anyone who earns less than 55 thousand euros and was not a resident of Cyprus for at least 3 years before starting work in the country will receive a 20% rebate or 8,550 euros incentive, whichever is less, for the next 7 years.
- If a specialist earns more than 55 thousand euros per year, but does not meet the above criteria, then he will be able to receive a 20% rebate or deductions of 8,550 euros, whichever is less, for the next 7 years.
- If an employee is already enjoying a 20% tax exemption, they will continue to enjoy the tax credit until the end of the 7-year period.
- If an employee has an annual income of more than 55,000 euros and has not been a resident of Cyprus for at least 10 years prior to starting work on the island, they are eligible to take advantage of the new 50% tax incentive for the remaining 17 years.
Thanks to these innovations, Cyprus can become a more attractive place for foreign companies that agree to transfer their staff to the island, thus creating a real infrastructure with all the positive consequences.
Please note that this article is for informational purposes only. For further advice, please contact us at the contacts listed on the site.