Extension of the income tax exemption of 20% or €8,550(whichever is the lower) for employment in Cyprus

On 15 December 2020, an amending law was published in the Gazette with respect to Article 8(21) of the Income Tax Legislation. The purpose of the amendment is to expand the existing legislation of attracting employees from abroad.

The basis of this Article

The 20% of the remuneration (with a maximum amount of €8.550 annually) from any employment exercised in Cyprus by an individual who was not a tax resident of Cyprus before the commencement of the employment is exempt from income tax.

Current Provisions up to 31 December 2019(pre-amendment)

Under the old framework, qualifying individuals commencing employment in Cyprus from 2012 and onwards, can enjoy the exemption. The exemption can be claimed for a maximum period of five years, from 1 January following the year of commencing employment, up to the tax year 2020.

New Provisions as of 1 January 2020 (post amendment)

Under the new framework, the exemption continues to apply for a five-year period and is available to qualifying individuals commencing employment between 2012 and 2025. The exemption is provided in the five years that follow the year of commencing employment.


Mr Pavel, a Polish taxpayer until 2018, moved permanently to Cyprus during 2019. He is employed by a Cypriot employer in November 2019.

His income from employment for the year 2020 was €60.000.

Tax Treatment

He can be benefited from the specific exemption for the year 2020, which is the year following the year of commencing employment, up to the year 2025 (maximum period of five years).

The amount which can be exempted is the amount of €8.550 (the lower of €8.550 and 20% of the income from employment)

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