In a further bid to enhance the benefits for existing and new international companies/groups to establish, expand or relocate their Headquarters to Cyprus, an improved tax incentive scheme was approved by the Cabinet of Ministers on 10th May 2022. The new system is clearly geared toward cementing the growing momentum of businesses headquartering on the island and to attract talented, highly skilled individuals.
Under the previous scheme, non-Cyprus residents working in Cyprus and earning in excess of EUR 100,000 per annum could benefit from a tax exemption of 50% on their employment income for the first 10 years of their employment. The new scheme expands on this:
- The minimum wage requirement is reduced from EUR 100,000 to EUR 55,000 per year, and the 50% tax exemption period will be extended to 17 years from the commencement of employment;
- A new employee whose initial wage starts below the minimum annual salary of EUR 55,000 will be entitled to a grace period of up to two years to meet the qualifying criteria of the scheme. Existing employees with a salary below EUR 55,000, will have a grace period of six months;
- Current employees, earning more than EUR 55,000, who resided abroad for 12 consecutive years before moving to and commencing their employment in Cyprus, can also benefit from the improved incentives of the new scheme, which will be applied retrospectively.
We and the Cypriot Government strongly believe that the new incentives represent one of the most competitive schemes of its kind in the EU. This is evidenced through the considerable movement of many companies, especially in the high-tech and gaming industries, that have already relocated their headquarters to Cyprus in recent years.
The hope is that these measures, together with the already well-known benefits of operating in Cyprus, will see the technological sector in Cyprus flourish, fulfilling one of the Government’s main strategic goals.
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