As Part of The Brain Gain Initiative, Cyprus Introduces New Income Tax Incentive for Attracting Skilled Employees, Professionals, and Cyprus Nationals Back to Cyprus

Cyprus has launched a new personal income tax benefit within the framework of the “Minds in Cyprus” Brain Gain Initiative aimed at attracting back highly qualified professionals, employees working abroad, and Cyprus nationals who have established their careers outside the Island.

Announced in the Official Gazette on 6 March 2026, the new benefit is part of the Cyprus Income Tax Law (Law 118(I)/2002) as amended and codified under Article 8 (21B). Even though it was made known to the public in the 2nd year, 2026, the law was made to be applicable retroactively beginning on 1 January 2025.

This is part of Cyprus’ overall plan to attract well-seasoned professionals, increase the domestic labor force, and ensure economic growth.

What Tax Exemption Is Offered?

Based on Article 8(21B), those who qualify can have up to 25 percent (25%) of:

• their salaries earned from a job in Cyprus; or
• their profits made through running a business locally.

The cap for the exemption is EUR 25,000 per year of tax, and the person may file for this relief for the first seven taxation periods only.

What Is Required to Be Eligible?

To qualify for this new taxable benefit, the candidate must fulfill all of these six criteria:

• Apart from the year of moving to Cyprus and starting work or business activities, the person should have been a tax resident of Cyprus during the tax year.
• Commencing from January 1st, 2025, to December 24th, the year is 2030, one has either started one’s job or business activities in Cyprus, whichever comes first.
• After 1 December of joining the job or the first December of running the business, one is supposed to have earned over €30,000 per year from the employment, or one is allowed to be at least running a business that yields €30,000 in yearly profit during the period after having joined it or having started it on a full-time basis.
• During the seven tax years before the year one started working for or carrying on one’s business through, one was not taxed in Cyprus.
• Having been a Cyprus tax resident at least once in those six years of tax non-residency.
• Having to satisfy at least one of these extra criteria:
  • Hold a recognized university degree, as recognized by the Cyprus Council for the Recognition of Degrees in terms of equivalence, and have been employed full-time outside Cyprus by an employer that was not a Cyprus tax resident for a total of at least 36 months during the 84 months preceding the month in which employment or business activity in Cyprus began; or 
  • To have worked abroad full-time for the 84 months immediately preceding the period one took up a job or began a business activity in Cyprus with employers which were not Cyprus tax residents.

Timeframe of the Exemption

This benefit can be availed during:

• The year when a person starts working or running a business in Cyprus.
• The subsequent six years.

For the relief to continue to be enjoyed, a person’s annual income from a job in Cyprus or the profit from carrying on a business activity there should be higher than €30,000 over the period of a tax year.

The Key Limitations

The bill also sets forth some fundamental limitations:

• Someone who is making a claim for an exemption based on Article 8(21B) cannot be getting the benefits from another exemption under Article 8(21A) as well.
• Article 8(21B) provides a relief of 25 per cent for profits and/or income which is only available once over the lifetime of the individual during the tax periods to which the law will apply.

Potential Impact of the New Incentive

The addition of the Article 8(21B) provision, by means of a tax exemption, offers Cyprus another way of providing a financial inducement to individuals of significant experience (not only professionals in their field) for their relocation to the country or the return of citizens to their home territory.

This provision, which gives relief to those who were mainly working abroad until they moved to Cyprus, is an attractive instrument as this encourages the return of highly skilled professionals with the possibility of sharing international knowledge and expertise with the local business environment.

Being eligible for the tax-free status not only if employed but also if one runs a business will cover more scenarios. Thus, it may affect both regular salaries as well as profits, which may be a factor for decision-making for someone deciding whether to join a company or to start their own business once moved to Cyprus.

Through the new tax relief programme, one may see the growth of domestic workforce supported alongside the encouragement of innovation, business development and long-term economic growth as additional benefits.

Even so, one has to make sure they are eligible and study to what extent the new incentive overlaps other tax exemption options that are outlined in a quite detailed way by different paragraphs of Article 8 of the Income Tax law, including, for example, the 50% exemption for income related to an employment in a job in Cyprus under Article 8(23A).

Conclusion

By the enactment of Article 8(21B), Cyprus has reaffirmed its efforts to attract eminent professionals and persuade the Cypriot, particularly those living abroad, to come back. Under the Brain Gain Initiative, eligible persons shall be entitled for a sizeable exemption on their personal income tax or corporate profits tax, for employment income or business income earned for a period of up to 7 years, provided that all the relevant conditions are fulfilled. Before relocating, the person should take into account whether they are eligible and whether the new incentive affects tax exemptions available under the Cyprus Tax Law.

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