Mon - Thu 08:30-17:30 - Fri 2:30+357 2226 2844
Follow Us
Number #1
Mid-Tier Firm in Cyprus
Trusted By
500+ Clients
Clients in Over
40+ Countries
Request Call Back

Differentiation of the Tax Regime to attract business and talent

Fidescorp Limited > Tax > Differentiation of the Tax Regime to attract business and talent

Following the Government’s announced Strategy for Attracting Business to Cyprus, the Council of Ministers approved a bill today, which makes the tax framework more attractive to foreign employees and specialised Cypriots with a high standard of living, permanently residing abroad for a number of years.

The employees and companies to be established in Cyprus due to this Strategy, are expected to bring both direct and indirect benefits to the local economy. Furthermore, the management of international businesses is encouraged to relocate their activities and headquarters to the Republic of Cyprus, thus developing a solid infrastructure on the island.

The bill, to be promoted to the House of Representatives as a next step, differentiates the 50% deduction from taxable income, for first employment in the Republic. Specifically, the bill implements the following:

  • 50% deduction on remuneration from employment exercised in Cyprus, earning at least €55,000 (reduced from €100,000 currently in effect) for any individual, regardless of whether already in Cyprus, who prior to the commencement of employment in Cyprus, was abroad for at least 12 consecutive years;
  • The exemption will apply for 17 years from commencement of employment (extended from 10 years currently in effect);
  • A grace period of 6 months for existing employees and 2 years for new employees will be granted for obtaining the benefit, in cases where the employment has started at a remuneration lower than €55,000. The benefit will be given for the residual period.

In addition to the above-mentioned tax deduction, the bill also addresses the right of establishment in the Republic and access to the labour market, for the spouses of professionals who will choose to utilise the new legislation and settle on the island.

The strategy, among the most competitive programs in the EU, which aims to the development of a one-stop-shop, has already had wide interest from international businesses and especially high-tech companies which in recent years seem to choose Cyprus for headquarter establishment and relocation.