As from 1 January 2012, individuals becoming tax residents and taking up employment in Cyprus are entitled to choose one of the following two exemptions:

1. Deduction 20% of income (up to a maximum of €8.550 annually), on remuneration from any office or employment exercised in Cyprus by an individual who was not a Cyprus tax resident before the commencement of his/her employment, for a period of 5 years commencing from 1st January following the year of commencement of the employment. This exemption will be available until the year 2020.

2. Deduction 50% on remuneration from any office or employment exercised in Cyprus by an individual who was not a Cyprus tax resident before the commencement of his/her employment, for a period of 10 years if his/her annual remuneration exceeds €100.000.

Furthermore, for individuals commencing employment from 1 January 2015, there will be additional requirements in order to be eligible for the 50% tax exemption. More specifically, a qualifying individual:

• Should not have been a Cyprus tax resident for at least 3 out of the last 5 years immediately prior to the year of commencement of employment and

• Should not have been a Cyprus tax resident in the tax year immediately prior to the year of commencement of employment.

The 50% tax exemption will be granted in any tax year in which the annual employment income of the qualifying individual exceeds €100,000, regardless if in a year during the 10-year period the employment income falls below €100,000. This provision shall apply where the annual employment income exceeds €100,000 during the first year of employment and the Commissioner is satisfied that the decrease and subsequent increase observed in the annual income of the employee was not made for the purpose of obtaining this tax benefit.

The two exemptions ( 20% and 50%) are mutually exclusive, and only one of them can be claimed by a particular taxpayer.