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Tax Incentives For Relocation To Cyprus – Tax Authorities



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As of 10 May 2022, a new tax incentive scheme was approved by
the Council of Ministers of the Republic of Cyprus, in an attempt
to attract talented professionals from all over the world, in
Cyprus. This new scheme has been introduced as facilitating the
headquartering of foreign businesses to Cyprus and the relocation
of talented, high-skilled employees and their families to Cyprus,
seeking also to facilitate the repatriation of Cypriot
professionals currently living and working abroad, by offering them
the same benefits as their foreign counterparts.

More specifically, based on the current tax system, people who
work in Cyprus but are non-residents of Cyprus and earn more than
EUR 100,000 per year can benefit from 50% tax exemption on their
employment income for the first 10 years of employment.

Under the proposed new scheme, the minimum wage entitling a
person to the tax exemption would be reduced from EUR 100,000 to
EUR 55,000 annually. In addition to the reduction of the minimum
wage, the tax exemption would extend from 10 years, to the first 17
years from the first year of the commencement of a person’s
employment in Cyprus. A grace period of 2 years will be given to
such new employees in cases where their initial annual salary is
below the minimum annual wage of €55,000, so that they would
be able to meet the required criteria, in order to benefit from the
scheme.

It is worth mentioning that this new system will also apply
retrospectively to current employees, provided that they were
residents abroad for 12 consecutive years before the commencement
of their employment in Cyprus. In such circumstances, a six-month
grace period will be implemented to meet the minimum annual wage
requirement of €55,000.

It has also been announced that another bill shall be expected
providing for the facilitation of granting visas and work permits
to spouses of professionals who opt to relocate to Cyprus and
regarding the creation of a ‘one-stop-shop’ to facilitate
this scheme. The Cyprus Government, through the Minister of
Finance, expressed its faith and confidence in this very
competitive scheme to make the island a business hub. It now only
remains to see when this new tax scheme would be enacted into law
and take effect. With all the above in mind, and considering all
the benefits that Cyprus offers, thinking of relocating and
headquartering here should be a top-ranking option for anyone.

Our law firm provides services in relation to company formation
and any other legal assistance and advice might be needed.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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