Tax Relief for individuals who relocate to Cyprus

Cyprus: A Special Tax Relief for Overseas Individuals

March 25, 2018

A three-year special Tax Relief for individuals who relocate to Cyprus for employment is available.

This exemption is applied to an individual who was resident outside the Republic of Cyprus before the commencement of his employment in the Republic and his gross annual income from employment does not exceed €100.000.

The special relief is calculated by applying a percentage of 20% on the individual’s gross income but with a maximum amount of €8.550. For example, if an individual’s annual gross income is €50.000, the amount of the exemption is restricted to €8.550 because the amount of the 20% of €50.000 exceeds the maximum threshold of €8.550. This amount is deducted from the individual’s gross income, and therefore the taxable income is reduced.

The exemption applies for five years commencing from the tax year following the year of relocation to the Republic for employment. For example, if the individual relocated and started work in Cyprus during 2018, then the exemption is available for the years 2019 to 2023.

If the individual’s gross annual income exceeds the amount of €100.000, then there is a 50% special tax relief. If for example, the individual’s yearly gross income from employment in the Republic is €110.000, then the exemption is amounting to €55.000 (50% of €110.000). This amount is deducted from the annual gross income and reduces the taxable income to half.

Subject to conditions, the exemption applies for ten years commencing from the tax year following the year of relocation to the Republic for employment.

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