least 10 consecutive years immediately before the commencement of his or her employment in Cyprus, was not a resident of Cyprus and meets one of the following conditions:
• He or she benefited from the 50% exemption in accordance with the provisions of Article 8(23) of the Income Tax Law and has continuous employment in Cyprus from the year of commencement of his employment until the 2021 tax year.
• His or her first employment in Cyprus commenced during 2016 to 2021 with a remuneration exceeding EUR55,000 per year.
• His or her first employment in Cyprus commenced during 2016 to 2021 with a remuneration that did not exceed EUR55,000 per year and within a period of six months from 26 July 2022, his or her remuneration exceeds EUR55.000 per year.
On 30 June 2023, the Income Tax (Amending) (No. 8) Law of 2023, which relates to amendments in the existing Article 8(23A) of the Income Tax Law, was published in the Official Gazette of Cyprus. It applies from 1 January 2022.
Based on the amended law, Article 8(23A) of the Income Tax Law, as revised, now provides the application of the 50% tax exemption on remunerations from employment that is exercised in Cyprus by a person who was resident outside Cyprus for a period of at least 15 consecutive years prior to the commencement of “first employment” in Cyprus and whose “first employment” in Cyprus commenced after 1 January 2022.
The tax exemption is granted for a period of 17 tax years or until the repeal of the subsection of the Income Tax Law, whichever occurs earlier, beginning with the year of commencement of “first employment” in Cyprus.
The tax exemption is granted in any year in which the remuneration from employment in Cyprus exceeds EUR55,000, regardless of whether in any tax year the remuneration falls below EUR55,000, provided that the following conditions are met:
• During the first or second year following the date of commencement of the “first employment” in Cyprus, the remuneration exceeded EUR55,000 annually.
• The Tax Commissioner is satisfied that a variation in the annual remuneration from employment in Cyprus does not constitute an arrangement aimed at obtaining the exemption.
The exemption is granted in the tax year of commencement of “first employment,” provided that the remuneration from the employment in Cyprus during the first 12 months exceeded EUR55,000.
Under Article 8(23A), “first employment” is considered when a person for the first time, after a period of 15 consecutive tax years in which he or she did not exercise any salaried services in Cyprus, commences to exercise salaried services in Cyprus, either for an employer resident in Cyprus or for an employer not resident in Cyprus.
Regarding employment that commenced before 1 January 2022, Article 8(23A) provides that regardless of the year of commencement of the first employment in Cyprus, the provisions of Article 8(23A) of the Income Tax Law apply from 1 January 2022 until
The following lifetime exemptions from tax on capital gains derived from property sales are available to individuals.
Contribution to the Central Agency for the Equal Distribution of Burdens. A seller who as part of a sales transaction transfers immovable property for which a general valuation has been set by the Department of Lands and Surveys is liable to a contribution equal to 0.4% on the sale proceeds.
A similar contribution is also due in the case of transferring shares as part of a sales transaction in a company that is not listed in any recognized stock-exchange and directly or indirectly owns such immovable property. The contribution is imposed at a rate of 0.4% is calculated by reference to the latest valuation of the immovable property carried out by the Department of Lands and Survey.
Transactions entered into as part of loan restructurings or company reorganizations or donations may be exempted from the above contribution.
Deductions
Deductible expenses The range of deductible expenses allowed in Cyprus is limited. Membership fees for trade and professional organizations and documented donations to approved charitable institutions are fully deductible.
Personal deductions and allowances The following are the principal deductions and allowances permitted.
Deduction or allowance
Allowable amount
Contributions to social insurance and other approved funds (for example, pension funds, provident funds and medical funds); the total contributions to the social insurance and other approved funds are restricted to 1/5 of taxable income) Various Life insurance premiums paid (certain restrictions exist) Various
Business deductions. All expenses incurred wholly and exclusively in the production of taxable income are deductible. In addition, the following allowances are given for depreciation and amortization:
• Plant and machinery: A straight-line allowance of 10% a year is given on most capital expenditure, except expenditure on certain automobiles. The allowance is increased to 20% for additions in 2012 through 2018.
• Industrial buildings: A straight-line allowance of 4% a year is available for industrial buildings. This allowance is increased to 7% for additions in 2012 through 2018.
Foreign nationals working in Cyprus must contribute to the Cyprus social security system unless either of the following applies:
• They can claim exemption according to bilateral agreements entered into by Cyprus (applicable for employees working in Cyprus for periods of approximately up to three years). Normally, coverage for one to two years is permitted. However, the two-year period can be extended if the competent institutions of the two countries give their consent. Cyprus has entered into bilateral agreements with Australia, Austria, Canada, the Czech Republic, Egypt, Greece, the Netherlands, Quebec, Serbia, the Slovak Republic, Switzerland, Syria and the United Kingdom.
• They are nationals of the European Union (EU), European Economic Area (EEA), Switzerland or the United Kingdom who are in Cyprus on secondment. Normally, coverage for up to two years is permitted. However, this two-year period can be extended if the competent institutions of the two countries give their consent. Such individuals should apply for a certificate of coverage issued by the social insurance authorities of their home jurisdictions in order to be exempted from social insurance contributions in Cyprus.
The bilateral agreements that Cyprus has concluded with EU Member States have been replaced by the EU Regulations 883/04 and 987/09 which coordinate the social security systems of the Member States.
D. General Healthcare System
The General Healthcare System (GHS) is applicable as of 1 March 2019 (Phase A). Based on the provisions of the GHS law, employers must withhold from their employees’ salaries relevant contributions and remit these together with their contributions to the social insurance department. In addition, the law provides that persons who are making interest, dividend or rental payments to individuals are also obliged (conditionally) to make a withholding with respect to GHS contributions and remit these contributions to the Tax Department. GHS contributions are made at the following rates, which are effective from 1 March 2020.
Any legal or physical person who, or the government that, is responsible for paying the emoluments of an officer, on the emoluments of the officer 2.90 A person earning income such as rental,
The fund of the government on the emoluments and pensions of the persons of the first, third and fourth items above 4.70
* For a three-month period (April 2020 to June 2020), reduced contribution rates applied.
If the sum of an employee’s emoluments, self-employed emoluments, pension income, emoluments of any person who holds or exercises an office and the income from dividends, interest and rent is in excess of EUR180,000, the amount of income on which the GHS contribution is calculated is capped at EUR180,000.
The EUR180,000 is calculated cumulatively in the following order:
• Emoluments from employment
• Emoluments from self-employment
• Emoluments from positions as officers
• Pensions
• Dividends, interest and rental income
E. Tax filing and payment procedures
The tax year in Cyprus is the same as the calendar year.
As of the 2024 tax year, all individuals who have taxable income in Cyprus must electronically file a personal tax return by 31 July of the year following the tax year (that is, the tax return deadline for 2024 is 31 July 2025). The Council of Ministers has the power to issue a decree regarding the individuals who can be exempted from this obligation. Before the 2024 tax year, resident and nonresident individuals whose gross income does not exceed EUR19,500 were not required to file tax returns.
The employer should withhold the relevant income tax from employees’ salaries through the Pay-As-You-Earn (PAYE) process. Income tax must be withheld on a monthly basis and remitted to the Income Tax Department of Cyprus. In addition, the employer must withhold the relevant social insurance and GHS contributions of the employee and remit them to the Social Insurance Department of Cyprus together with the relevant employer’s social insurance and GHS contributions by the end of the month following the month of assessment.
Each individual who is considered to be self-employed but has no obligation to submit audited financial statements (on the basis that the individual has turnover of less than EUR70,000), must file electronically a personal income tax return by 31 July of the year following the tax year. The final personal tax of an individual must be settled by the same date.
Self-employed individuals preparing audited financial statements must submit electronically their personal tax return within 15 months after the end of the tax year (that is, the 2024 tax return should be filed electronically by 31 March 2026). The final tax for self-employed individuals preparing audited financial statements is due by 1 August of the year following the tax year.
Overdue tax is subject to interest at a rate of 5% per year (rate applicable as of 1 January 2024). In addition, any person failing to pay the tax due by the payment due date is liable to a monetary charge of 5% on the tax due date. An additional monetary charge of 5% is imposed on the tax due if the tax due is not settled within two months from the deadline for payment of the relevant tax liability.
prove that the conditions under which they were naturalized continue to be met.
• The company is a Cypriot Private Institute of Tertiary (Higher) Education licensed by the Ministry of Education, Sport and Youth.
Non-EU nationals with a monthly gross salary exceeding EUR2,500 per month who intend to work for an approved IBC can easily obtain a temporary resident permit allowing them to work in Cyprus for an initial period of up to three years that can be further extended.
For individuals who may become employees of IBCs with a monthly gross salary below EUR2,500 or may become employees of non-IBCs, an additional step in the process is required. They must obtain the consent of the labor office because such employees are considered to be unskilled labor and it has to be proved that the company cannot find properly qualified employees for that position who are Cypriots or EU residents residing in Cyprus. This may be a lengthy process with an uncertain outcome depending on the specific job description. After the required documentation is submitted and the approval of the labor office is obtained, the same process for other third-country nationals is followed. The labor office usually provides its approval for one year, which can be extended or renewed up to a maximum of four years, but certain categories of employment such as agricultural laborers or cooks can be renewed without being subject to the maximum years’ limitation.
For individuals intending to be employed in Cyprus who need a visa to enter the country, an entry permit can be issued instead of a visa after the submission of the required documents. Within three months after the date of issuance of the entry permit, the employees must submit the remaining documents so that the CRMD can issue the residency card.
Temporary residence and work permits are issued approximately two to three weeks after the foreign national submits the required documents (this only applies to employees under the IBC regime; for employees under general employment procedures, the examination period can take up to four months). After the registration is completed, the employee is given a temporary residence permit, which is now in the form of a plastic card. The employee can travel in and out of Cyprus for the duration of the permit, provided that he or she is not outside Cyprus for a continuous period exceeding three months. If the employee is absent from Cyprus for more than three continuous months, the permit is canceled.
Intra-corporate transfers. An intra-corporate transfer is considered to be a temporary secondment for occupational or training purposes of a third-country national who, at the time of application for an intra-corporate transferee permit, meets all of the following criteria:
• He or she does not reside in an EU Member State.
• He or she is transferred from an undertaking established in a non-EU Member State to an entity belonging to the undertaking or to the same group of undertakings that is established in an EU Member State.
• He or she is bound by a work contract prior to and during the transfer and has the right to mobility between host entities established in one or several second EU Member States.
The procedures for entry, stay and work in Cyprus in the context of an intra-corporate transfer depend on whether Cyprus is the first or second EU Member State.
In general, the application for an intra-corporate transferee permit must be submitted to the authorities of the EU Member State where the first stay takes place. If the first stay is not the longest, the application must be submitted to the authorities of the EU Member State where the longest overall stay is to take place during the transfer (first EU Member State).
The application for an entry permit is submitted when the assignee is abroad by the company in Cyprus (employer) at the central offices of the Civil Registry and Migration Department in Nicosia.
If the application is approved, an intra-corporate transferee residence permit is issued for the assignee, which is in a card format. Depending on the merits of each individual case, the maximum duration of the permit can be the following:
• Manager: three years or equal to the duration of the transfer, if shorter
• Specialist: three years or equal to the duration of the transfer, if shorter
• Trainee Employee: one year or equal to the duration of the transfer, if shorter
The inter-corporate transferee permit entitles the assignee to work in any company in Cyprus belonging to the same group of companies. On the permit, the main employer is indicated.
The procedures for the entry, residence and work permit when Cyprus is considered as the second Member State (that is, when the assignee will reside and work in Cyprus for a shorter period than in another EU Member State) depend on the duration of the transfer. For the mobility to be possible, the assignee must hold a valid intra-corporate transferee permit issued by the first EU Member State, covering the entire duration of the mobility.
If the mobility does not exceed 90 days within a period of 180 days, it is a short-term mobility. In this case, no permit is issued by the Cypriot authorities and the assignee having the intra-corporate transfer permit issued by the first EU Member State may reside and work in Cyprus, if the conditions of the legislation are met. During the short-term mobility, the assignee can work in any company in Cyprus belonging to the same group of companies.
If the transfer of the assignee relates to a period exceeding 90 days, it is considered to be long-term mobility. In this case, the assignee must apply for and obtain a long-term mobility permit (card format) from Cyprus and meet the provisions of the legislation. The application for a long-term mobility permit may be submitted when the assignee is abroad or when he or she is in Cyprus for short-term mobility. It is submitted by the company in Cyprus (employer) at the central offices of the Civil Registry and
In addition to the above investment, the applicants should be able to prove that they have at their disposal a secure annual income of at least EUR50,000. This annual income increases by EUR15,000 for their spouse and by EUR10,000 for each of their or their spouse’s dependent minor children. This income should derive from abroad and may include salaries or wages, pensions, dividends from shares, bank deposits interest and rents, which can only be proved through a tax return declaration from the country for which they declare tax residency in cases where the applicants choose to invest under the first criterion above. In calculating the total amount of income, the spouse’s income may also be taken into account.
In cases where the applicant chooses to invest as stated in the second, third and fourth items above, his or her total income or part of it may also come from sources coming from activities in Cyprus.
Quality criteria. Under Section 2 of the Regulation, the following are the quality criteria:
• The applicant and his or her spouse must submit a clean criminal record certificate from their country of origin and their country of residence and generally they should not be considered as a threat in any way to public order or public security in Cyprus.
• The applicant and his or her spouse must confirm that they do not intend to undertake any sort of employment in Cyprus with the exception of their employment as directors in a company in which they have chosen to invest under this policy.
• In cases in which the investment does not concern the company’s share capital, the applicant and/or his or her spouse are allowed to be shareholders in companies registered in Cyprus, and the income from the dividends derived from such companies may not be considered as an obstacle for the purposes of obtaining the immigration permit. In such companies, they may also hold the position of an unpaid director.
• In cases in which the applicant chooses to invest as stated in the second, third and fourth items stated in Investment criteria, he or she should provide evidence regarding his or her accommodation in Cyprus (for example, title of ownership or contract of sale and proof of payment for the property or rental agreement).
J. Cyprus Digital Nomad Visa Scheme
Note: At the time of writing, the Digital Nomad Visa Scheme was frozen as the quota of 500 cases had been reached and had not been extended.
The Cyprus Digital Nomad Visa Scheme allows nationals from non-EU and non-EEA countries who can perform their work independent of location (that is, the person is able to work remotely from any place in the world without the need of being in an office of a certain employer) using telecommunications technology, to reside temporarily in Cyprus and work for an employer registered abroad or perform work through telecommunications technology for companies or clients located abroad.
The scheme’s goal is to strengthen Cyprus as a center for the provision of electronic services, whereby the attraction of digital
nomads will contribute to the development of the business ecosystem and consequently to the economic development of the country. The introduction of the Cyprus Digital Nomad Visa Scheme is included in the Strategy for Attracting Businesses for Activities and/or Expansion of their Activities in Cyprus.
This scheme applies to non-EU or non-EEA nationals who meet the following conditions:
• He or she can perform work remotely through telecommunications technology.
• He or she is employed by a company registered abroad for which he or she can perform at his or her work location independently or is self-employed and offering services remotely for clients located abroad.
• He or she can prove that he or she has stable and sufficient monthly net income of at least EUR3,500 (after the deduction of contributions and taxes).
Individuals who are granted a Digital Nomad residence permit will benefit from the following:
• Right of residence for a year in Cyprus, with a possibility of renewal for two years
• Right of residence for family members for the same period as the digital nomad, without being employed or performing economic activity in Cyprus
• Tax residency in Cyprus if they reside in Cyprus for one or more periods that in total exceed 183 days within the same tax year, provided they are not tax residents in any other jurisdiction
A digital nomad’s family members can reside in Cyprus for the same period as the digital nomad, without being employed or performing any economic activity in Cyprus. Family members include the spouse or partner in a civil union and underaged children. Family members also need to obtain a temporary residence permit by following a specified procedure. The following is the procedure:
• Within three months of arrival, the applicant should submit the relevant application along with the required documents, as stated in the relevant document lists, at the offices of the Civil Registry and Migration Department in Nicosia, after arranging an appointment through the online platform, to obtain a temporary residence permit. All documents accompanying the application forms should be officially translated and duly certified or ratified.
• In case the applicant legally resides in Cyprus under a different status, he or she has the right to submit the relevant application to be granted a temporary residence permit as a Digital Nomad at the Civil Registry and Migration Department in Nicosia.
• Applications can be submitted personally or through an authorized representative.
• Applications that are not accompanied by all the required documents will not be accepted for consideration.
• Any change in the applicant’s data during the examination of the application should be notified immediately to the Civil Registry and Migration Department.
• For the application submission, the amount of applicable fees shall be paid.