Article 8(21) and Article 8(23) amendments on Income Tax

In an effort to attract new talent in Cyprus and boost the island’s economy, amendments were made to the Income Tax Law and specifically with the addition of new article 8(21A) -passed in in July 2022- and new article 8(23A)- passed in June 2023.

Article 8(21) has been replaced by new article 8(21A) which now grants a 20% tax exemption to non-Cypriots whose first employment in Cyprus begins from the day of enforcement. The exemption will apply until 2027. To qualify as a non-Cypriot, the candidate must not have stayed in Cyprus for at least 3 consecutive years. In addition, even if they did not live in Cyprus applicants must show that they were not employed by a Cypriot employer for 3 consecutive years. There is a cap limit of €8,550 to the reduced amount for employees whose 20% cut exceeds the amount. The beneficiaries will enjoy the exemption for 7 years from the day of employment. It is noted that persons who benefited from the previous exemption granted by the old article 8(21) continue to enjoy the benefit of the previous exemption.

Article 8(23) was replaced by new article 8(23A) which has been further amended and grants a 50% tax exemption. The exemption applies to recipients whose first employment began after 1 January 2020. Eligible candidates should not have been Cypriot Residents for at least 15 years before they were employed in Cyprus. The exemption is capped to €55,000 and will be applied for 17 years after the first day of the beneficiary’s employment. The exemption will apply to any eligible applicants whose annual salary exceeded €55,000 for the first or second year of their employment, even if their salary is reduced after.

The exemption will be granted from the first year the recipient’s salary exceeded €55,000 for 12 months consecutively. If the exemption is granted the beneficiary will not be enjoying the tax exemptions of article 8(21) and 8(21)(A), even if eligible. If a candidate’s employment began before the 1st of January 2022, they can still benefit from the law if they can prove one of the following:

  1. That they enjoyed the 50% cut from their first employment until the year 2021
  2. That their first employment began between 2016 and 2021 and their salary exceeded €55,000
  3. That their first employment began between 2016 and 2021 and their salary did not initially exceed €55,000 but it surpassed the amount within 6 months of their first employment.

Our team at Christys can advise you or your employees on how to benefit from the new amendments and how to comply with your tax obligations.

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