The 50% exemption for moving to Cyprus, article 8(23A)

You need this if

• You started employment in Cyprus on or after 1 January 2022 and had not been a Cyprus tax resident, nor worked here, for the 15 years before it.
• Your remuneration from that employment is above €55,000 a year — measured over the first or the second twelve months after it started.
• You started between 1 January 2022 and 29 June 2023 and were away for 10 years rather than 15: the earlier version of the article still governs your case.
• You are employed. The exemption is for employment income, and it applies whether or not you became a Cyprus tax resident afterwards.
• Your first employment in Cyprus began before 2022 and you stayed employed here without a break until the end of 2021, with the old 50% for pay over €100,000 behind you, or a 2016–2021 start that paid over €55,000. A transitional proviso brings you in from 2022.

You do not need this if

• You are self-employed. The department is explicit that 8(23A) does not apply to self-employed people; the 25% exemption under 8(21B) is the one that reaches business profits.
• You earn under €55,000. There is a minimum here, unlike the 20% exemption, and it is tested year by year.
• You already claim the 20% or the 25% exemption for the same year. Only one of the three may be claimed in any tax year.
• You are looking for relief from the defence contribution on dividends and interest. That is non-dom status, a separate and unrelated question.

• The date your first employment in Cyprus began, and evidence of what you were doing in the years before it.
• Payslips and employment contracts from abroad, proof of social insurance contributions abroad, rental contracts abroad, and tax residence certificates from the foreign authority for the 15 years — or 10, on the earlier version — before you started here.
• Your Cyprus employment contract and payslips, to show the €55,000 is met over the twelve months the department measures.
• Form T.D.59, the employee’s declaration for PAYE, where the exemption is claimed from your employer.
• If your employer changed inside a consolidated group, the evidence of that: it is what keeps a pre-2023 claim alive.

1. 1

   Work out which version of the article governs you

   Employment starting between 1 January 2022 and 29 June 2023 can fall under the version before amending law 51(I)/2023: at least 10 consecutive years immediately before in which you were not a Cyprus tax resident, and the job has to be your first employment in Cyprus: anyone who has ever worked here as an employee does not qualify, although incidental employment of up to 120 days in a tax year does not count. The exemption then attaches to that first employment. Employment starting from 1 January 2022 onwards falls under the current version: at least 15 consecutive years with no Cyprus tax residence and no employment here, and the exemption attaches to any employment exercised in Cyprus.

2. 2

   Check the €55,000 the way the department measures it

   The threshold is remuneration above €55,000 a year, and it is enough that the first or the second twelve-month period after the start of the first employment clears it. For the year in which the employment starts the exemption is available even if that calendar year’s pay is smaller, provided the first twelve months exceed €55,000. On the earlier version the same allowance exists for the final year — the year employment ends or the 17 years run out — if the last twelve months exceed €55,000.

   PracticeThe department reserves the right to look at pay that moves up and down: the Commissioner has to be satisfied that a fluctuation is not an arrangement built to obtain the exemption.

3. 3

   Count the years you get

   The exemption runs for the tax year in which the first employment in Cyprus starts and the 16 years that follow — 17 years in all — provided the year’s remuneration is over €55,000 and the article is still in force. There is no cap on the amount exempted in a year.

4. 4

   If you started before 2022, check the transitional proviso

   The second proviso to article 8(23A) lets in three groups whose first employment in Cyprus began before 1 January 2022: people who were granted the old 50% under article 8(23), the one for pay above €100,000, even if some year fell short of it; people whose first employment began in 2016–2021 and paid more than €55,000 in its first twelve months; and people with the same 2016–2021 start whose pay was €55,000 or less at first but exceeded €55,000 over the twelve months to 26 January 2023. All three also need employment in Cyprus without a break from the first job until 31 December 2021, and 15 consecutive years without Cyprus tax residence immediately before it (10 on the earlier version of the article). The exemption then runs from tax year 2022 until the 17th year counted from the year employment began: a 2015 start claims 2022 to 2031, at the €55,000 threshold rather than €100,000, tested year by year. In the return, question 7 of part A2 asks which exemption you are moving from: 8(23) or 8(21).

   PracticeA change of employer, sick leave and maternity, paternity or parental leave do not break the continuity; a spell out of work, or working abroad for a non-Cyprus employer, does. For the 2022–23 test, sick or parental leave counts at your usual salary (circular 4/2024, Part V and examples 21–26).

5. 5

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

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

6. 6

   Keep the evidence, because nobody checked it in advance

   Since nothing is approved up front, the file you keep is the whole of your defence: foreign payslips and contracts, foreign social insurance records, foreign rental agreements, and foreign tax residence certificates covering the years of absence the article requires.

7. 7

   Declare it in the return under the right code

   In part 4A1 of the return the exempt employment is shown by its own income code rather than the ordinary code 1, and for code 12, the version before law 51(I)/2023, the return also asks for the date the first employment in Cyprus began, in columns 10 and 11, in the year that date falls in. Code 13, the current version, does not use those columns.

What is exempt

50% of the remunerationNo annual ceiling on the amount, unlike the 20% and 25% exemptions.

Minimum remuneration

over €55,000 a yearMet if the first or the second twelve months after the start clear it; then tested year by year.

Years of absence required

15 consecutive years10 years on the version that governs employment starting 1.1.2022 to 29.6.2023.

How long it runs

17 yearsThe year the first employment starts plus the 16 following years.

Started before 2022

transitional provisoOld 8(23) holders, or a 2016–2021 start above €55,000, employed without a break to the end of 2021: 50% from 2022 until year 17 from the start.

Changing employer

depends on the versionCurrent version: any employment in Cyprus qualifies, so a change is harmless. Earlier version: the exemption dies with the first employment, unless the new employer belongs to the same consolidated group (circular 10/2022).

Leaving Cyprus for a while

no extensionYou may resume claiming on return, but the 17 years are not pushed back by the years away.

Approval needed

noneClaimed through PAYE on form T.D.59; a tax ruling is optional, at taxruling@tax.mof.gov.cy.

One relief per year

8(21A), 8(21B) or 8(23A)Only one of the three may be claimed in any tax year.

• Assuming the 15 years apply to you because they are the current rule. Employment that started between 1 January 2022 and 29 June 2023 may sit under the 10-year version, which is more generous on absence and stricter on everything else.
• Changing employer on the earlier version. There the exemption belongs to the first employment: a move ends it, unless the new employer is in the same consolidated group for accounting purposes.
• Reading the €55,000 as a calendar-year test in the first year. It is the first twelve months of employment that decide the starting year; after that the test is the tax year’s remuneration.
• Counting on the years spent abroad to extend the 17. They do not: a person who leaves for two years and comes back claims only what is left of the original window.
• Claiming the 50% and the 20% in the same year. One of the three exemptions per tax year, and picking the wrong one costs real money — the calculator will show you which.
• Expecting an approval letter. Nothing is approved in advance; what exists is your evidence and, if you want one, a tax ruling you have to ask for.
• Treating it as a substitute for non-dom status. They are independent, they can both apply in the same year, and they cover different taxes.
• Assuming the old 50% ended for you when your pay dropped below €100,000. If you held it and stayed employed in Cyprus without a break until the end of 2021, the transitional proviso moves you onto 8(23A) from 2022: the threshold becomes €55,000 and the period 17 years from your start rather than 10.

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(23) and 8(23A)The table of versions, thresholds, periods and transitional provisions.
• The department’s FAQ on article 8(23A)Both versions, question by question, including employer changes and absences.
• Form T.D.59 — the employee’s declaration for PAYEWhere the exemption is claimed from your employer. The current year’s form is on the department’s forms page.
• Income Tax Law 118(I)/2002Articles 8(23) and 8(23A) as amended by laws 121(I)/2022 and 51(I)/2023.

• Tax Department, “Απαλλαγή 50% για πρώτη εργοδότηση στη Δημοκρατία — Άρθρα 8(23) και 8(23Α)”: the comparison table, the applicable article by start date, and the transitional provisions
• Tax Department FAQ on article 8(23A), before and after amending law 51(I)/2023: the conditions, the €55,000 provisos, employer changes, absences, evidence, T.D.59 and tax rulings
• Circular 10/2022 on the relocation exemptions, and interpretative circular 2017/4 for the older article 8(23)
• Circular 4/2024 on the current article 8(23A) after amending law 51(I)/2023: the conditions, the €55,000 test, breaks in employment and employer changes, with worked examples, and the transitional provisions for a start before 2022 (Part V)08.07.2024
• Income Tax Law 118(I)/2002, art. 8(23) and 8(23A), as amended by 121(I)/2022 and 51(I)/2023