The Parliament on 14 July 2022 has voted a significant amendment on Income tax Law in an aim to broaden the scope of the 50% and 20% exemption from Income Tax of employment of tax resident individuals.

20% Tax exemption:
The new provisions state that an employee who:

  1. for 3 consecutive years immediately before starting his/her first employment in the Republic, worked for a foreign employer outside the Republic and;
  2. his/her first employment started after the publication of the amended article in the Gazette (26 July 2022) and until the year 2027

is eligible to claim exemption from taxation at the lowest of the 20% of his/her gross salary or EUR 8.550.

This exemption is granted for a period of 7 years starting from the year that follows the year of initiation of the employment.

50% Tax exemption:

The amendment which is effective as of 01 January 2022 expands the period of the 50% exemption from 10 to 17 years and also, provides for a decrease of the lowest gross salary requirement from more than EUR 100,000 to more than EUR 55,000. In order to benefit from the 50% exemption, the tax resident individual should not have been tax resident in Cyprus 10 consecutive years prior to the initiation of their first employment in Cyprus.
The exemption is granted in any year during which the gross salary exceeds the amount of EUR 55,000 regardless of whether in a tax year the remuneration decreased below the threshold provided that that in the first or second year of employment the annual salary exceeded the threshold. The commissioner of tax may challenge the reduction of salary from year to year in case the Commissioner believes that the fluctuation in the employment income is an arrangement put in place in order to obtain the benefit.
It should also be noted that regardless of the above, the exemption is granted in the first year of employment if the salary exceeds the threshold in the first twelve (12) months of employment and during the tax year of the termination of employment or the completion of the 17th year of employment (whichever is the earliest) if the salary exceeds the threshold in the last twelve (12) months.
First employment exercised in Cyprus is defined as the time 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.
Regardless of the year of initiation of the employment, the exemption is also granted from the tax year 2022 onwards until the completion of the 17th year of employment (counted from the month of commencement of the employment) of an individual who satisfies the 10-year criterion mentioned above and:

  1. Benefitted from the 50% exemption with a continued employment in the Republic up to 2021 or;
  2. Whose first employment in the Republic started during the years 2016 and 2021 and the starting salary exceeded the amount of EUR 55,000 per annum or;
  3. Whose first employment in the Republic started during the years 2016 to 2021 and the starting salary did not exceed the amount of EUR 55,000 per annum and within 6 months from the date of publication of the “new exemption” in the official gazette the salary was adjusted in order to exceed the amount of EUR 55,000 per annum.

In case the above exemption is granted, the taxpayer is not eligible to claim any other exemption provided in article 8(21), 8(21)(A) and 8(23) of Income tax law. The exemption is granted to the taxpayer once in a lifetime.


The above amendments have been put in place as part of Cyprus government’s action plan aiming to attract and retain individuals as well as assisting in business growth of Cyprus.

Tax Department