A. Update

As per the Social Insurance Law of 2010, the contribution rate for both employee and employer will increase by 0.5% once in every five years. Therefore, the contributions to the Social Insurance Fund will increase from the current 8.3% to 8.8% on employees’ insurable earnings.

B. Statutory Compliance Release Date: January 01, 2014

C. Effective Date: January 01, 2024

A. Update

The maximum insurable earnings used for calculating the amount of contribution to the Social Insurance Funds have been increased for the tax year 2024 as follows:

• Maximum basic insurable earnings for weekly paid employees from €1,155 to €1,209
• Maximum basic insurable earnings for monthly employees from € 5,005 to € 5,239
• Maximum for a Year for weekly paid employees from € 60,060 to € 64,077
• Maximum for a Year for monthly paid employees from € 60,060 to € 62,868

B. Statutory Compliance Release Date: November 29, 2023

C. Effective Date: January 01, 2024

A. Update

Pursuant to regulations 8(1) and (2) of the Social Insurance (Contributions) Regulations and the relevant Decree pursuant to Article 20 of the law, the maximum insurable earnings of employees for calculating the amount of contribution to the Social Insurance Funds have been changed as under:

a) Maximum for weekly employees has increased from €1,117 to €1,155

b) Maximum for monthly employees has increased from € 4,840 to € 5,005

c) Maximum for a Year for weekly paid employees has increased from € 58,084 to € 6,0060

d) Maximum for a Year for monthly paid employees has increased from € 58,080 to € 6,0060

B. Statutory Compliance Release Date: December 09, 2022

C. Effective Date:

For weekly paid employees: January 02, 2023

For monthly paid employee: January 01, 2023

A. Update

Cyprus Tax Department has released the latest formats for Emoluments Certificate Τ.Φ.63 for the financial year 2022 and Declaration of Allowances Τ.Φ.59 for the financial year 2023.

B. Statutory Compliance Release Date: November 18, 2022

C. Effective Date: FY 2022 for T.Φ.63
FY 2023 for T.Φ.59

A. Update

Further to our previous notification “New income tax exemptions for employment income” the Cyprus Tax Department has released a circular 10/2022 on November 01, 2022, which provides clarifications to the application of the exemptions in Articles 8(21a) & (23a).

As per the provisions of these two Articles, non-resident employees can avail the exemption on remuneration for their "first-time employment" carried out in the Republic on or after July 26, 2022, and January 01, 2022, respectively.

The Circular provides that an employee can be considered to have first employment started in the Republic when for the first time he/she is engaged in service as an employed person in the Republic either by a resident or non-resident employer of the Republic. The occasional employment (full/part- time) for a period not exceeding a total of 120 days in a tax year is not considered.

An employee shall not be considered to have the first employment or ceases to be considered to have the first employment in the following cases:

1. when at any time in the past, he/she had performed salaried services in the Republic which did not constitute occasional employment.
2. when he/she terminates the first employment contract and enters a new employment contract with another employer.

   Note, if the other employer is a member of the same consolidated group for accounting purposes, then the concerned employee shall be considered to maintain his/her first employment.

3. when he/she 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.

   It should also be noted that, where other employers are a member of the same consolidated group for accounting purposes with the first employer, the employers are considered to be first employer and the exemption is also granted on the remuneration from these other employments.

The Circular also provides that the term “occasional employment” defines any full-time or part-time employment exercised in the Republic either:

1. based on a contract, of a total duration (including any renewals and periods during which the individual could have performed his/her duties outside the Republic) not exceeding 120 days, or
2. without a contract and the total duration of the employment does not exceed 120 days.

It is also specified that the probation period, that may be provided in contracts of employment, cannot be separated, and it constitutes part of the relevant employment.

General clarifications

1. An employee can claim only one of the exemptions under subsections (21), (21A), (23) and (23A) of Article 8 in respect of each tax year.
2. For each tax year, the exemptions claimed may be changed and the exemption in the previous year may be granted, provided that the conditions for applying each exemption are met.
3. The exemption shall also be granted to persons employed by companies set up by them or persons affiliated to them and registered in social security and Income tax department by compiling with their obligations.

The Circular has also provided some examples for better clarification. Few of these examples are as under:

Example 1:

A person who was employed in the Republic based on a three-month contract under full-time employment during the period June 01, 2009 - August 31,2009 and employed in Company A on September 01,2022.

In this case, the employment during the period June 01, 2009 - August 31,2009 is an occasional service (<120 days), and the individual's employment in Company A is considered as a first job.

Example 2:

As in example 1, but the person was additionally employed in the Republic from November 01,2009 - January 31,2010 on a part-time basis by another employer.

In this case, the person’s occasional employment in 2009 exceeded 120 days. As a result, the employment in Company A is not considered as a first-time employment.

Example 3:

A person who had not been employed in the Republic until 2017, employed by Company A on January 01, 2018. On October 01, 2020, he/she terminates his employment with Company A and enters new employment with Company B. Which the Companies do not belong to the same consolidated group for accounting purposes.

Here, the person’s employment in Company B is not considered as a first-time employment.

Example 4:

As in example 3, but on January 01, 2022, the person terminates his/her employment with Company B and has a new engagement with Company A again.

In this case also, the person's employment in Company A on January 01, 2022, is not considered to be first-time employment.

B. Statutory Compliance Release Date: November 01, 2022

C. Effective Date: July 26, 2022

A. Update

Effective from July 26, 2022, the income tax exemptions for employment income provided in Articles 8(21) and 8(23) will cease to be available for employments commencing after this date, and the new Articles 8(21A) and 8(23A) will be applicable instead.

Under existing Article 8(21), the non-resident employees working in Cyprus can avail an exemption of 20% of their employment income or €8.550 per annum, whichever is lower. The exemption is available for 5 years starting from the tax year following the year of employment to the qualifying individuals who commenced employment in Cyprus between 2012 and July 26, 2022 (termination date for the existing article).

Under the new Article 8(21A), exemption of 20% of the employment income or €8.550 per annum, whichever is lower, will be available to a non-resident employee whose commences first employment in Cyprus on or after July 26, 2022, and this exemption will be available for a period of 7 years from the tax year following the tax year of commencement of employment. The conditions to avail this exemption are:

• These employees were not residents of Cyprus for a period of at least 3 consecutive preceding tax years, and
• These employees were employed outside of Cyprus by a non-resident employer.

Under existing Article 8(23), the non-resident individuals who took up employment in Cyprus and received emoluments of more than €100.000 per annum can avail a tax exemption of 50% of their employment income for the first 10 years of employment. Individuals who meet the conditions for this exemption before its termination date (July 26, 2022) will continue to benefit for the relevant 10-year period, unless the individual also qualifies for the new 50% exemption under Article 8(23A) in which case the individual will benefit for a longer period of 17 years.

The new Article 8(23A) provides for tax exemption of 50% of the remuneration of employees whose first employment in Cyprus began on January 01, 2022 or later, for a period of 17 years starting from the month of employment in Cyprus, provided that their remuneration per year exceeds €55.000 and the employees were not residents of the Republic for a period of at least 10 consecutive years immediately before the commencement of their employment in Cyprus.

Individuals whose employment commenced before January 01, 2022, may also qualify for the new 50% exemption under Article 8(23A) if:

• Date of commencement of first employment in Cyprus lies between 2016 and 2021 and either the remuneration at commencement of first employment in Cyprus exceeded €55.000 p.a., or the remuneration at commencement of first employment did not exceed €55.000 p.a. but within 6 months from July 26, 2022, their remuneration exceeds €55.000 p.a.; or
• There is any existing beneficiary of exemption under Article 8(23) and who has continuous employment in Cyprus up to and including 2021.

It is important to note that the law does not require an individual to become a Cyprus tax resident to benefit from the new exemptions provided above, nor the employer to be a Cyprus tax resident employer.

Also, tax exemptions under articles 8(21), 8(21A), 8(23) and 8(23A) are mutually exclusive.

B. Statutory Compliance Release Date: July 26, 2022

C. Effective Date: July 26, 2022

A. Update

Annual Income Tax Reports, namely, Claim for Allowances for the Year 2022 (Form T.Φ.59/T.D.59A) and Emoluments Certificate for the Year 2021 (Form T.Φ.63/T.D.63A), have got updated.

B. Statutory Compliance Release Date: December 27, 2021

C. Effective Date: FY 2021 for T.Φ.63, FY 2022 for T.Φ.59

A. Update

It has been announced that the maximum insurable salary of the employees for the purposes of calculating the amount of contribution to the Social Insurance Funds be increased as follows:

• Maximum for weekly paid employees: € 1,117
• Maximum for monthly paid employees: € 4,840
• Maximum for Year for weekly paid employees: € 58,084
• Maximum for Year for monthly paid employees: € 58,080

B. Statutory Compliance Release Date: December 07, 2021

C. Effective Date:
For weekly paid employees: January 03, 2022
For monthly paid employee: January 01, 2022

A. Update

The Ministry of Labor, Welfare and Social Insurance informs, in accordance with the provisions of the Maternity Protection (Amending) Law of 2021 (Law 167 (I) / 2021) and the Social Insurance (Amending) Law (No. 3) of 2021 (L.168 (I) / 2021), published in the Official Gazette of the Republic, with no. 4857 and dated November 05, 2021, that for female employees who are on maternity leave during the week ending on November 07, 2021, maternity leave is increased, by 4 weeks if it is a second childbirth or the acquisition of a second child by adoption or by surrogate mother, and by 8 weeks if it is a third or subsequent birth or the acquisition of a third or later child by adoption or by surrogate mother.

B. Statutory Compliance Release Date: November 05, 2021

C. Effective Date: November 07, 2021

A. Update

Under Regulation 8 (1) and (2) (Contributions) of Regulations of 2010 - 2020 and the relevant Decree under Article 20 of the Law No. 59(I) of 2010 on Social Insurance, the Department of Labour relations vide notification dated 14 January 2021 announces the increase in maximum insurable salary of the employees, for the purposes of calculating the amount of contribution to the Social Insurance Funds, Annual Leave with Earnings, Surplus Personnel and Human Resources Development fee, as provided below:

• -Monthly: from EUR 4,572 to EUR 4,784
• -Yearly: from EUR 54,864 to EUR 57,408

B. Statutory Compliance Release Date: January 14, 2021

C. Effective Date: January 01, 2021

A. Update

On 15 December 2020, The Tax Collection (Amending) Law of 2020 was issued. As per this law, Article 8(21) of the Income Tax Laws 2002 was amended wherein the tax exemption to the qualified individuals, who qualifies as a non-tax resident for the tax year prior to commencement of his/her employment in Cyprus, has been extended for another five years until 2025.

The tax exemption available is lower of €8.550 or 20% of the remuneration arising from employment in Cyprus. Provided, the exemption can be availed, by the qualifying individuals, from the start of the tax year following the year of commencement of the employment in Cyprus. Provided further that, the exemption can be claimed for a maximum period of five years up-to tax year 2025.

B. Statutory Compliance Release Date: December 15, 2020

C. Effective Date: January 01, 2020

A. Update

As a result of the Covid-19 pandemic, the Cyprus Government decided on March 15, 2020 to apply the reduced GHS contributions for the months of April and May 2020.

However, following the vote by the House of Representatives on March 27, 2020 of the Financial Support Program in response to the financial impact of the Coronation, it has been decided not to pay the increased contribution to the GSEY for a period of three months i.e., April to June 2020.

Please find the below table which specifies the period of application of the relevant contribution rates:

B. Statutory Compliance Release Date: March 30, 2020

C. Effective Date: April 01, 2020 till June 30, 2020

A. Update

Parents working in the private sector will be granted “Special Leave” to remain at home to care for children up to 15 years of age. Special Leave can last up to four weeks for a salary of up to €2,500:

• 60% of the salary will be paid for the first €1,000 of the parent’s salary, and
• For the next € 1,000 of the salary, a 40% allowance will be paid.

Special Leave is granted to one of the two parents, not both. For single parent families, the rate of payment of the allowance is set at 70% and 50%, respectively. This Leave type is applicable only for April 2020 and does not impact our existing customers.

B. Statutory Compliance Release Date: March 16, 2020

C. Effective Date: April 01, 2020

A. Update

Basic Insurable Earnings considered for contribution to the following have been increased:

• a) Social Insurance Fund;
• b) Redundancy Fund;
• c) Industrial Training Fund; and
• d) Holiday Fund.

Basic Insurable Earnings Limit has been increased as under:

• a) Monthly: from £ 4,554 to £ 4,572
• b) Yearly: from £ 54,648 to £ 54,864

B. Statutory Compliance Release Date: January 02, 2020

C. Effective Date: January 01, 2020