The 20% exemption for a first job in Cyprus, article 8(21A)

You need this if

• Your first employment in Cyprus starts between 26 July 2022 and 31 December 2027.
• You worked full time outside Cyprus for a non-resident employer for the three consecutive years immediately before it, with no more than four months between that job ending and this one starting.
• You had no employment in Cyprus in the 15 years before the start year — or, for a start between 26 July 2022 and 29 June 2023, no employment here at all before that year, ignoring incidental work of up to 120 days in a tax year.
• You earn too little for the 50% exemption. This one has no minimum salary at all, which is exactly when it is the right answer.

You do not need this if

• You are self-employed. The department states that 8(21A) does not apply to self-employed people; only the 25% exemption reaches business profits.
• You expect to change employer soon. The exemption belongs to the first employment and ends with it.
• You earn well above €55,000 and meet the longer absence: the 50% exemption is worth far more, and only one of the three may be claimed in a year.
• Your Cyprus employment started on or before 25 July 2022. That is the older article 8(21), with its own five-year period.

• The start date of your first employment in Cyprus, and the end date of the job you had abroad — the gap between them is a condition, not a detail.
• Employment contracts and payslips from the foreign employer covering the three years, and proof of social insurance contributions abroad.
• Tax residence certificates from the foreign authority for the last three years, and rental contracts or similar evidence of living there.
• Form T.D.59 for your employer: this is where the exemption is claimed, and where a mistake shows up as too much tax withheld all year.

1. 1

   Check that this is a first employment in the article’s sense

   For a start between 26 July 2022 and 29 June 2023, first employment means you had never exercised employment in Cyprus before — incidental full or part-time work of up to 120 days in a tax year is ignored. For a start between 30 June 2023 and 31 December 2027, it means the first time you exercise employment in Cyprus after 15 consecutive tax years in which you exercised none. Either way, the employer can be resident here or not.

2. 2

   Check the three years abroad and the four-month gap

   You must have been employed full time outside Cyprus by an employer who is not a Cyprus tax resident for the three consecutive years immediately before your first employment here. The department adds a limit the law text does not spell out: the period between the end of the foreign employment and the start of the Cyprus one must not exceed four months.

3. 3

   Know what you get and when it starts

   The exemption is 20% of the remuneration from that first employment, capped at €8,550 in a tax year. It runs for seven years starting with the year after the year employment began, or until the first employment ends, whichever comes first. There is no minimum salary, and no academic qualification is required.

   PracticeBecause it starts the following year, the year you actually arrive is usually taxed in full — and that is the year people expect the relief and do not see it.

4. 4

   Claim it through your employer on form T.D.59

   There is no application and no approval procedure for this exemption either. You claim it through the employer’s PAYE by completing form T.D.59, and the tax withheld drops. If you want the department’s position on your eligibility in writing, a tax ruling can be requested at taxruling@tax.mof.gov.cy under circulars 2015/13 and 2016/13.

5. 5

   Keep the evidence yourself

   Nothing was approved in advance, so keep what proves the conditions: foreign payslips and contracts, foreign social insurance records, foreign rental agreements and foreign tax residence certificates for the three years before you started here.

6. 6

   Do not change employer while you rely on it

   The relief is given only against the remuneration from the first employment in Cyprus. The department answers the question directly: change employer for any reason and you are no longer entitled. If the change is what you want, check first whether you qualify for the 50% exemption instead, which in its current version follows you to any employment here.

What is exempt

20% of the remunerationFrom the first employment exercised in Cyprus.

Annual ceiling

€8,550So the cap binds once the pay passes €42,750 a year.

Minimum salary

noneUnlike the 50% and 25% exemptions, no income threshold at all.

Academic qualifications

none requiredStated expressly by the department.

Foreign employment required

3 consecutive yearsFull time, for an employer who is not a Cyprus tax resident, immediately before; a gap of at most four months.

How long it runs

7 yearsStarting the year after employment begins, or until the first employment ends, whichever is earlier.

Start window

26.7.2022 to 31.12.2027Employment starting up to 25 July 2022 falls under the older article 8(21): five years, and no first-employment requirement.

Changing employer

ends the exemptionIt is given only against pay from the first employment.

• Expecting the relief in the year you arrive. It starts the year after employment begins — the first calendar year is taxed in full.
• Letting more than four months pass between the foreign job and the Cyprus one. The department treats that gap as breaking the three-year condition.
• Changing employer and assuming the relief moves with you. It does not: it belongs to the first employment, and any change for any reason ends it.
• Claiming it as a self-employed person. It applies to employment income only; the 25% exemption is the one that covers business profits.
• Taking the 20% when you qualify for the 50%. Only one of the three exemptions can be claimed in a tax year, and on a salary above €55,000 the difference is thousands of euro.
• Assuming the 15-year condition applies to every case. It governs starts from 30 June 2023; before that the test is different, and incidental work of up to 120 days a year does not break it.
• Filing the return with employment code 1 while claiming a relief. The relief has its own income code in part 4A1, and with code 1 the whole of section A2 has to be empty.

Anything marked “practice” is what the department does in the office, not a rule you can hold it to. Rules carry a source.

• The department’s comparison of articles 8(21) and 8(21A)Amounts, periods, beneficiaries and the start dates that separate the two.
• The department’s FAQ on article 8(21A)The four-month gap, the 120-day rule, the evidence, and what changing employer does.
• Form T.D.59 — the employee’s declaration for PAYE
• Income Tax Law 118(I)/2002Articles 8(21) and 8(21A), the latter added by law 121(I)/2022.

• Tax Department, “Απαλλαγή 20% (ή €8.550) για πρώτη εργοδότηση στη Δημοκρατία — Άρθρα 8(21) και 8(21Α)”: the comparison of the two articles, the periods and the start windows
• Tax Department FAQ on article 8(21A): the definition of first employment in each window, the three years abroad and the four-month gap, no minimum pay, no qualifications, the evidence, T.D.59 and tax rulings, and the effect of changing employer
• Circular 10/2022 on the relocation exemptions, and interpretative circular 2017/4 for the older article 8(21)
• Income Tax Law 118(I)/2002, articles 8(21) and 8(21A), the latter introduced by law 121(I)/2022