Amendments to the Income Tax Law with respect to the 50% employment income tax exemption  
On 30 June 2023, amendments to section 8(23A) of the Cyprus Income Tax Law (the “ITL”) were published in the Government Gazette of the Republic of Cyprus with respect to the 50% exemption of remuneration over EUR 55,000 from first employment (the “Amending Law”).
The Amending Law has a retrospective effect as from 1 January 2022.
We set out below a summary of the main amendments introduced by the Amending Law: 
1. There is an extension in the number of minimum years of non-Cyprus tax residency immediately prior to commencement of first employment in Cyprus i.e. the number of years has been extended from 10 to 15 consecutive years, prior to the commencement of the first employment. 
2. A new definition for “First employment in Cyprus” has been introduced. First employment in Cyprus is considered when an individual for the first time, after the period of 15 consecutive tax years during which they were not performing any salaried services in Cyprus, commences the exercise of employment in Cyprus with a Cypriot or non-Cypriot employer.  
3. The exemption applies for a period of 17 years from the year of commencement of the employment in Cyprus or until the provisions of section 8(23A) of the ITL are abolished (whichever occurs earlier).
4. The revised provisions now apply to remuneration from employment in Cyprus, whereas previously it was restricted solely to remuneration from first employment in Cyprus. Therefore, the exemption may be granted even if the employee changes employer during the 17-year period.
5. Individuals who previously qualified for the 50% exemption on their remuneration from their first employment, under the old provisions of section 8(23A) of the ITL, will still be eligible for this exemption, as long as all the conditions that were in place before the publication date of the Amending Law are satisfied.
Furthermore, according to the Amending Law, the provisions of section 8(23A) of the ITL will apply from 1 January 2022 onwards, regardless of the year when an individual began their first employment in Cyprus. These provisions will remain in effect for a period of 17 consecutive tax years or until the current section is abolished, whichever comes first. This applies to individuals who have had continuous employment in Cyprus since the commencement of their first employment up to and including the tax year 2021 and who were considered non-Cyprus tax residents for at least 15 consecutive years immediately prior to starting their first employment in Cyprus and: 
a. The individual was eligible for the 50% exemption based on section 8(23) of the ITL; or 
b. The individual’s first employment in Cyprus commenced between the tax years 2016-2021, with emoluments exceeding EUR 55,000 per annum; or 
c. The individual’s first employment in Cyprus commenced between the tax years 2016-2021, with emoluments not exceeding EUR 55,000 per annum, but within six months from the date the previous amendments were published in the Gazette, i.e. from 26/07/2022, the individual’s remuneration exceeded EUR 55,000 per annum.