Dear Valued Clients,
With reference to our previous newsletter dated 17 August 2022 we would like to inform you that an amending law with regard to Article 8(23A) of the Income Tax Law was published on the Official Gazette on 30 June 2023. We set out below a summary of the main changes:
Amended provisions of Article 8(23A)
- The amending law provides for the 50% exemption from employment in Cyprus by an individual who was not resident of Cyprus for a period of 15 consecutive years (instead of 10) prior to the commencement of the first employment.
- The individual will be eligible to claim the exemption from the year of commencement of the employment in Cyprus and for a period of 17, or until the provisions of this article are abolished (whichever occurs earlier);
- Under the amended provisions the exemption is no longer limited to first employment and may therefore be granted even if the employee changes employer during the above period;
- Individuals who commenced employment in Cyprus prior to the publication of the amending law of Article 8(23A) and who were eligible for the exemption under the previous provisions of this Article (i.e. being residents outside Cyprus for a consecutive period of at least 10 years) may continue to claim the exemption under the conditions in effect prior to the publication of this amending law.
- An individual is considered to have commenced first employment in Cyprus when for the first time (after a period of 15 consecutive years during which he was not performing any salaried services in Cyprus) commences his employment in Cyprus to an employer resident in Cyprus or to a non-Cyprus resident employer.
Transitional provisions
Irrespective of the year of commencement of the first employment in Cyprus the provisions of the amended law shall apply from the 1st January 2022 up until the completion of 17 consecutive tax years or until the provisions of this article are abolished, whichever occurs earlier, starting from the tax year of the commencement of first employment in Cyprus, of individuals who have continuous employment in Cyprus from the year of commencement of first employment up to and including tax year 2021 and who for a period of 15 consecutive years immediately before the commencement of first employment in Cyprus were not resident of Cyprus, and
- Were eligible for the exemption under Article 8(23);
- First employment in Cyprus commenced during the years 2016-2021 with employment remuneration exceeding €55.000 per year;
- First employment in Cyprus commenced during the years 2016-2021 with gross remuneration below €55.000 but increased above €55.000 within 6 months from 26 July 2022.
The amended law is effective as from the 1st January 2022.
