Taxation Of Foreign Employees

KPMG has been operating in Cyprus since 1948 and currently employs more than 800 professionals working from 6 offices across the island. It is a member of KPMG International Limited, a global organisation of independent professional services firms providing Audit, Tax and Advisory services. KPMG operates in 143 countries and territories and has approximately 273,000 people working in member firms around the world. Clients look to KPMG for a consistent standard of service based on high-order professional capabilities, industry insight, local knowledge and expertise.

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The rules for determining the income liable to tax are the same as those applying in the case of other employees. A foreign employee of an offshore entity is, therefore, liable to tax in respect of his emoluments irrespective of whether he is working in Cyprus or abroad and his emoluments include, in addition to the salary, benefits in kind accruing to him in respect of his office or employment.

THE MAIN CONCESSIONS GRANTED TO OFFSHORE EMPLOYEES ARE SUMMARISED BELOW:

1. Foreign employees working outside Cyprus are taxed at 10% of the normal rates, but are not entitled to personal allowances. However, the remuneration of such employees is completely exempt from income tax if received in or through Cyprus;

2. Foreign employees working in Cyprus are taxed at 50% of the normal rates and are entitled to all personal allowances. Their remuneration, however, during the period of any absence abroad is exempt from tax.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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