Income tax exemptions for expats living in Cyprus: what are your options?
Situated in the Eastern Mediterranean, the Republic of Cyprus boasts a strategic geographical location at the hub of three continents; Europe, Asia and Africa and a pleasant sunny climate year round.
As a former British Colony, English is widely spoken throughout the island with 80% of the population being relatively fluent. It is these factors that make Cyprus a popular destination for expats to find work and relocate.
Regardless of an individuals’ status of tax residency or domicile, an expat relocating to Cyprus from overseas qualifies for one of the following income tax reductions on revenue generated from legitimate employment:
50% of the compensation package from any employment carried out in Cyprus by an individual who was residing outside the Republic of Cyprus before starting employment in Cyprus. The exemption is applicable for redemption for a ten year period starting from the first year of employment, as long as the employees employment income exceeds €100,000 per annum.*
*Please note that for individuals commencing employment from 01/01/2015, there are additional requirements in order to be eligible for the 50% tax exemption – a qualifying individual should not have been a Cyprus tax resident for at least 3 out of the last 5 years immediately prior to the year of commencement of employment and he/she should not have been a Cyprus tax resident in the tax year immediately prior to the year of commencement of employment.
20% of the compensation package or €8,500 (whichever is lowest) deriving from any employment carried out in Cyprus by an individual who was resident outside Cyprus before starting official employment in Cyprus. The exemption is applicable for redemption for a five year period starting from January 1st following the starting year of the employment and is applicable for the forthcoming tax years until 2020.
*The 50% tax exemption would not be granted to an individual who has been a Cypriot tax resident for a minimum of 3 out of the last 5 consecutive years immediately prior to the year of commencement of official employment.
Eltoma Corporate Services specialises in maximising the tax benefits in a variety of jurisdictions. Contact us if you are considering the move to Cyprus.
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