3016 Limassol, Cyprus

41, Misiaouli & Kavazoglou Street, 2nd Floor, Office 201

+357 25 87 14 14

41, Misiaouli & Kavazoglou Street, 2nd Floor, Office 201

+357 96 63 66 26

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Clarification for the application of the income tax exemptions for employment income

M. Target Group would like to inform you that on the 1st of November 2022, the Cyprus Tax Department issued Circular Νο. 10/2022 clarifying the application of the new 20% and 50% income tax exemptions for employment income, together with a range of practical examples. One important clarification of the circular is the term “first employment”, which specifies that an individual is not considered to have first employment or ceases to be considered to have first employment in the following cases:  
  • Has previously performed salaried services in Cyprus that did not constitute “occasional employment”
  • Terminates the first employment contract and enters into a new employment contract with another employer, unless the other employer is a member of the same consolidated group for accounting purposes, when the individual is considered to maintain the first employment.
  • Has a second or more employments with other employers that run parallel to the first employment. In such a case, the exemption will be granted only on the remuneration from the first employment. If the other employers are members of the same consolidated group for accounting purposes as the first employer, it is considered that the specific employments also constitute first employment and the exemption is also granted on the remuneration from this other employment/s.
The term “occasional employment” refers to any full-time or part-time employment exercised in the Republic either:
  • Under a contract, of a total duration (including any renewals and periods during which the individual could have performed his duties outside the Republic), not exceeding 120 days.
  •  Without a contract and the total duration of the employment does not exceed 120 days.
In addition, it is stated that the probationary period that may be provided for in employment contracts, constitutes part of the relevant employment. As always, M. Target Group specialists remain at your disposal should you require any further information, clarification or professional assistance with any tax matter.  


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