By: N. Pirilides & Associates LLC
The Cabinet of Ministers on 10.05.2022 approved a new tax incentive scheme aimed at attracting foreign companies and high-skilled employees to Cyprus.
The scheme further seeks to repatriate Cypriot professionals who are currently living and working abroad by offering them the same benefits as their foreign counterparts.
The attraction of such professionals to Cyprus shall inevitably increase the number of international companies who relocate their headquarters/offices to the Republic or help existing companies grow their Cyprus-based operations.
The scheme would also make it easier for the spouses of foreign workers to obtain a residence permit, and also access the labour market.
As Finance Minister Constantinos Petrides said in a statement “we are convinced that this scheme is one of the most competitive of its kind in the European Union”.
The scheme will be submitted to parliament to become law soon and includes the following incentives:
- a 50% tax exemption for employees receiving more than €55,000 (previously it was more than €100,000) in annual wages.
- the time period for which the tax exemption would be applicable will be extended from 10 to 17 years.
- the time period for the tax exemption kicks in during the employee’s 1st year of employment in Cyprus.
- Additionally, the above terms will also be applied retroactively to current eligible employees earning more than €55,000 in annual wages, provided that they resided abroad for 12 consecutive years before they started working in Cyprus.
A grace period of 2 years will be given to new employees, as well as a grace period of 6 months to existing workers, in order for them to gain the required prerequisite criteria for the scheme. This concerns cases where an employee’s initial remuneration started at an amount below the minimum annual salary.
For more information on the above, please contact us at [email protected] or [email protected].
