News & Updates

FAIRFAX CYPRUS – ALERTS AFFECTING PAYROLL CALCULATIONS:

Last month a number of amendments were published in the Cyprus Government Gazette. Part of those amendments affect Personal tax Law.

Revised Personal Income Tax Exemption Regime

Currently the Law provides for a  50% exemption from income tax on employment income received  from any employment exercised in Cyprus by any individual who was  a non- Cyprus resident before commencing such employment. Before the announcement of the amendments the exemption applied for a period of 5 years, commencing in the year of taking up employment, provided that the annual remuneration exceeds €100.000.

The new incentive proposes that the period for which the exemption is available is increased from 5 years to 10 years.

In addition, currently the income tax law also provided for a  20% exemption from income tax for any remuneration from any employment exercised in Cyprus by an individual who was not a resident of Cyprus before the commencement of the employment, subject to a maximum exemption of €8.550. This 20% exemption applies for a max period of 3 years commencing from the calendar year following commencement of the employment.

The new incentive proposes that for employments which commenced during or after 2012 the 3 year period is increased to 5 years (subject to certain criteria ).

The new amendment also includes that the last year for which the 20% exemption will be available is 2020.

It is also highlighted that the above two exemptions are not concurrent , therefore those individuals eligible for the 50% exemption they will not claim the 20% exemption.

Both amendments will have retrospective effect from 1^st of January 2015.