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Cyprus has recently enacted an amending law that introduces income tax exemptions for non-residents, with retroactive effect from January 1, 2022.
The new law specifically affects personal income tax declarations for the year 2022. The Tax Department announced on Tuesday that the relevant tax form will soon be made available for download through the Taxisnet system. The public will be informed about the opening of the filing period via press releases and/or emails.
The income tax exemptions target individuals who have been non-residents of Cyprus for a period of 15 years prior to their first employment in the country and whose annual income exceeds €50,000. This marks a change from the previous threshold of €100,000. Under the new provisions, eligible individuals will only be taxed on 50% of their declared income.
The aim of this initiative is to attract highly-paid professionals to Cyprus and encourage foreign companies, especially those in the IT sector, to establish their headquarters on the island. The income tax exemption is available for a maximum duration of 17 years. However, if an individual's income falls below €55,000 in any given year of employment in Cyprus, they will not qualify for the tax exemption for that specific year.
In addition, the Tax Department emphasized that the deadline for filing income tax declarations and making income tax payments for the year 2022 is October 2, 2023. This requirement applies to employed individuals, pensioners, and self-employed individuals whose total gross income in 2022 exceeded €19,500.
The introduction of this amending law reflects Cyprus' efforts to enhance its competitiveness by attracting skilled professionals and foreign companies to contribute to the country's economic growth and development. The income tax exemptions for non-residents are expected to incentivize investment and bolster the island's position as an attractive destination for international businesses.
By fLEXI tEAM