What this covers
Cyprus has three live income tax exemptions for people who come here to work: 50% under Article 8(23A), 25% under Article 8(21B) and 20% under Article 8(21A). They are constantly confused, including by people advising on them, because the conditions look similar and are not.
You may claim only one of the three in any tax year. This sets out which one you can claim, what it is worth, and the conditions that quietly disqualify people.
The three exemptions side by side
| 50%, Article 8(23A) | 25%, Article 8(21B) | 20%, Article 8(21A) | |
|---|---|---|---|
| What is exempt | 50% of pay from any employment exercised in Cyprus | 25% of pay from any employment in Cyprus or profits from any business carried on in Cyprus | 20% of pay from your first employment in Cyprus |
| Annual cap | None | €25,000 | €8,550 |
| Minimum pay | Above €55,000 a year | Above €30,000 a year | None |
| How long | 17 tax years | 7 tax years | 7 tax years |
| Clock starts | The tax year your first employment in Cyprus begins, plus the next 16 | The tax year you begin employment or business here, plus the next 6 | The tax year after the year your first employment begins |
| Absence required before | Not Cyprus tax resident and no employment in Cyprus for at least 15 consecutive years | Not Cyprus tax resident for the 7 tax years before | Full time work outside Cyprus for a non-resident employer for the 3 consecutive years before |
| Prior Cyprus residence | Must not have been resident | Must have been Cyprus tax resident in some year before those 7 | Not tested |
| Qualifications needed | None | Recognised degree plus 36 months abroad in the last 84, or 84 months abroad | None |
| You must start work | From 1 January 2022 onwards, no closing date | Between 1 January 2025 and 31 December 2030 | Between 26 July 2022 and 31 December 2027 |
| Open to the self-employed | No | Yes | No |
| Survives a change of employer | Yes | Yes | No |
| Must you be Cyprus tax resident? | No | Yes, in every year claimed except the starting year | No |
| Times per lifetime | Once | Once | Once |
| Circular | 4/2024 | see the Department FAQ | 10/2022 |
Read the table with one thing in mind. The 50% has no cap, so it beats the others outright whenever you qualify. The absence test is the price: fifteen clear years.
The two closed schemes, and the older 50%
Three columns above are not the whole story, because two predecessors still govern people who arrived earlier.
| 8(23), the old 50% | 8(21), the old 20% | |
|---|---|---|
| What is exempt | 50% of pay from any employment in Cyprus | 20% of pay, or €8,550, whichever is lower |
| Minimum pay | Above €100,000 a year | None |
| How long | 10 years, from the year employment begins | 5 years, from the year after employment begins |
| Absence required | Not resident in any 3 of the 5 years before, and not resident in the year before | Not resident in the year before employment began |
| Employment started | Up to 25 July 2022 | 2012 to 25 July 2022 |
There is also an earlier version of the 50% itself. Article 8(23A) as enacted by Law 121(I)/2022 governs first employment that began between 1 January 2022 and 29 June 2023. It required ten clear years of absence rather than fifteen, and it applied only to pay from the first employment. Amending Law 51(I)/2023 replaced it with the current version, which requires fifteen clear years and applies to any employment in Cyprus.
The distinction is not academic. It decides whether you may change job.
The four things that go wrong
1. Only one exemption a year, and the law says so
The Department’s FAQ on the 25% is explicit: only one of the three exemptions may be claimed in each year. The statute says the same from both directions. Under Article 8(21B), where that exemption is granted the Article 8(21A) exemption is not granted. Under Article 8(23A), where that exemption is granted the exemptions in subsections (21), (21A), (21B) and (23) are not granted.
You do not stack the 50% on the 25%. You pick.
Non-dom status is a separate matter. All three FAQs say the same thing: non-dom status exempts you from defence contribution on dividends and interest, the Article 8 exemptions cut income tax on pay, they are not mutually exclusive, and both can be claimed in the same tax year.
2. The old 50% dies if you change employer. The new one does not.
This is the single most expensive distinction in Cyprus expat tax.
Under 8(23A) as enacted by Law 121(I)/2022, for first employment starting between 1 January 2022 and 29 June 2023, the exemption attaches only to pay from the first employment exercised in Cyprus. The Department’s answer is unambiguous: any change of employer, for any reason, makes the person no longer eligible, and it ends the period over which the exemption can be claimed. The one relief is that a new employer that is a member of the same consolidated group for accounting purposes counts as a continuation of the first employment, and where a person has more than one employer within that consolidated group the exemption applies to the total pay from all of them.
Under 8(23A) as amended by Law 51(I)/2023, the exemption attaches to pay from any employment exercised in Cyprus. The Department’s answer to the identical question is yes, a change of employer does not affect eligibility in any way.
Same subsection number, opposite answers, decided by when your first employment started.
The 20% under Article 8(21A) behaves like the older 50%. The Department states that it is granted only on pay from the first employment, and the explanatory table gives the period as seven years or until the termination of the first employment, whichever occurs earlier.
3. The clock does not stop when you leave Cyprus
If you leave Cyprus part way through the exemption period and come back, you resume for whatever is left. You do not get the missing years back at the end.
The Department gives its own worked example for the 50%. A person whose first employment in Cyprus began on 1 October 2022 can claim for 2022 through 2038. If they are outside Cyprus for 2027 and 2028 and return in 2029, they may claim for 2029 through 2038, in each year where pay exceeds €55,000. The period is not extended by the years of absence.
The FAQ on the 25% gives the parallel example on a seven year clock. Start on 1 October 2025, claim 2025 to 2031, away in 2027 and 2028, and you claim 2029 to 2031.
One further note on the 50%. The statute grants it for seventeen tax years or until the subsection is repealed, whichever occurs earlier. Parliament has written its own exit into the provision. Seventeen years is the maximum, not a guarantee.
4. Only the 25% is open to the self-employed, and it is a repatriation scheme
Article 8(21B) exempts 25% of pay from employment in Cyprus or of profits from any business carried on in Cyprus, so freelancers and sole traders can use it. The other two cannot be used by the self-employed, and all three FAQs say so.
But 8(21B) carries a condition that gets missed, because it does not appear in most summaries. You must satisfy both of these:
- you were not a Cyprus tax resident in the seven tax years before the year you start; and
- you were a Cyprus tax resident in some year before those seven.
It is the repatriation of talent scheme. It is aimed at people coming back, not at people arriving for the first time. If you have never been Cyprus tax resident, you do not qualify, however good your degree is.
The other conditions are cumulative. Pay or profits above €30,000 in the first twelve months. Starting between 1 January 2025 and 31 December 2030. And either a degree recognised by the Cyprus Council for the Recognition of Higher Education Qualifications plus at least 36 months of full time work abroad for a foreign employer within the preceding 84 months, or 84 months of full time work abroad for a foreign employer. In each year you claim, pay or profits must exceed €30,000 and you must be Cyprus tax resident, except in the year you start.
Worked example
The same €90,000 salary, taxed four ways in 2026. Income tax only.
No exemption. Taxable €90,000. Tax = €13,500 at €72,000, plus 35% of €18,000 = €6,300. Total €19,800.
50%, Article 8(23A). Exempt €45,000, taxable €45,000. Tax = €2,000 + €2,500 + 30% of €3,000 = €900. Total €5,400.
25%, Article 8(21B). 25% of €90,000 is €22,500, inside the €25,000 cap. Taxable €67,500. Tax = €2,000 + €2,500 + 30% of €25,500 = €7,650. Total €12,150.
20%, Article 8(21A). 20% of €90,000 is €18,000, so the €8,550 cap applies. Taxable €81,450. Tax = €13,500 at €72,000, plus 35% of €9,450 = €3,307.50. Total €16,807.50.
The 50% saves €14,400 a year against no exemption. The 20% saves €2,992.50.
In practice you rarely qualify for more than one. The 50% wants fifteen years away and no prior Cyprus residence, the 25% requires prior Cyprus residence, and the 20% closes to new starters at the end of 2027. The example is there to show why it is worth checking which one you are actually entitled to before assuming the smallest.
The figures cover income tax only. General Healthcare System contributions are separate and are not reduced by these exemptions.
What commonly goes wrong
Claiming the 50% and the 25% together. Only one of the three in any year. The statute blocks the combination twice over.
Changing job on the pre-June 2023 version of the 50%. If your first employment in Cyprus began between 1 January 2022 and 29 June 2023 you are on the ten year absence version, and moving employer ends the exemption for good unless the new employer is in the same consolidated group.
Expecting the 17 years to pause while you are abroad. It does not. You lose the years you are away.
Assuming the 25% is a scheme for new arrivals. It requires that you were once a Cyprus tax resident. Without that history you cannot claim it.
Being self-employed and planning around the 50%. It does not apply to the self-employed. Neither does the 20%.
Missing the €55,000 test in the first or second year. For the 50%, pay must exceed €55,000 in either the first or the second twelve month period following the start of first employment. If it does not, the door does not open later, and the Commissioner may examine whether a change in pay was arranged to obtain the exemption.
Reading the 20% clock wrong. It runs seven years from the year after your first employment starts, not from the year it starts. That is different from the other two.
Missing the closing dates. The 20% requires first employment to begin by 31 December 2027, and the 25% requires you to start by 31 December 2030. The 50% has no closing date at present.
Treating occasional work in Cyprus as harmless. For 8(23A) as it stood under Law 121(I)/2022, occasional employment in Cyprus of no more than 120 days in a tax year is ignored. Under the current version, applying to first employment from 30 June 2023, the requirement is simply that you exercised no employment in Cyprus in the fifteen preceding years.
Assuming somebody has approved it. There is no application or approval process for any of the three. You claim through your employer’s payroll on Form T.F.59, and the burden of proving eligibility is yours. Keep foreign payslips, foreign employment contracts, proof of foreign social insurance contributions, foreign tenancy agreements and tax residence certificates from the foreign authority covering the whole absence period. If you want the Department’s formal position in advance, apply for a tax ruling at taxruling@tax.mof.gov.cy under circulars 2015/13 and 2016/13.
Assuming Cyprus residence is required for the 50% or the 20%. It is not. Both are granted whether or not you become Cyprus tax resident after starting employment here. The 25% is the exception: it requires residence in every year claimed except the starting year.
Forgetting that the employer can be foreign. For the 50% and the 20%, first employment in Cyprus counts whether the employer is resident in Cyprus or not. Remote employees of foreign companies are inside these schemes, not outside them. The remote work guide covers how that interacts with tax and social insurance.
Where to check
The Tax Department publishes a separate FAQ page for each of the three exemptions, and two summarised explanatory tables, one for 8(23) and 8(23A) and one for 8(21) and 8(21A). The wording that governs is in Article 8 of the Income Tax Law itself.
Because eligibility turns on your history rather than on your salary, and because the answer differs by the month your first employment began, this is a case worth putting in front of a firm licensed to advise in Cyprus, or worth a ruling from the Tax Department, before you file.
