Tax incentives for highly qualified foreign specialists approved in Cyprus
Tax incentives for highly qualified foreign specialists approved in Cyprus.
On July 14 the Cyprus Parliament approved important amendments to the Income Tax Law.
They introduced provision of significant tax benefits to highly qualified foreign specialists.
In particular, employees who were hired by Cypriot companies from January 1, 2022 will now be exempt from paying taxes at a rate of 50% for up to 17 years. In addition, 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 working for a Cypriot company. Those who come to work in Cyprus and earn less than 55,000 euros a year will have two years to bring their salary up to the level at which a 50% tax deduction begins to take effect.
Those who already reside on the island and work for international companies from 2016 to 2021 will also be able to extend the benefits from 10 to 17 years. People with earnings from 55,000 euros to 100,000 euros will be eligible for the remaining 17-year period. The authorities have not forgotten about employees of foreign companies who receive less than 55,000 euros per year. They will have 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 prior to starting employment 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 up to 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 an employee is already enjoying a 20% tax exemption, they will continue to do so 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 this amendment, Cyprus can become a more attractive place for foreign companies that will agree to transfer their personnel to the island, thus creating a better infrastructure with all the positive consequences for the Cypriot economy. In addition, the amendment aims to ensure that Cypriots employed abroad could return to their homeland and continue their activities here. As a result, revenues to the state budget will increase.
The above is for informative purposes only. Further professional advice should be sought for each particular case. Our firm does not accept any responsibility for any loss or damage occurring by acting on the basis of this information.