Cyprus is taking a significant step to attract talented professionals back to the island. As part of the Government’s “Minds in Cyprus – Brain Gain Initiative”, the amending Income Tax Law 17(I)/2026, published on 6 March 2026, introduces a new 25% income tax exemption for eligible individuals, with the benefit capped at €25,000 per year.
The initiative forms part of a broader strategy aimed at reversing the “brain drain” and encouraging experienced professionals, entrepreneurs and skilled individuals—particularly those who have spent time working abroad—to return to Cyprus and contribute to the country’s economic growth.
What Is the New Tax Benefit?
Under the new Article 8(21B) of the Income Tax Law, eligible individuals may benefit from a 25% exemption from income tax on employment income or profits from business activity carried out in Cyprus.
The exemption is capped at €25,000 per year, meaning the tax relief equals 25% of the relevant income, up to a maximum annual benefit of €25,000.
This incentive represents a significant enhancement compared to previous similar schemes, which provided a 20% exemption capped at €8,550.
For professionals relocating to Cyprus, the measure can result in substantial annual tax savings, making the country an increasingly attractive location for career development and entrepreneurship.
Eligibility Conditions
To qualify for the exemption, individuals must satisfy all of the following conditions:
- Commencement of employment or business activity
The individual must begin employment or business activity in Cyprus between 1 January 2025 and 31 December 2030. - Minimum income threshold
Within the first twelve months following the commencement of employment or business activity, the individual must earn employment income or business profits exceeding €30,000. - Prior non-residency in Cyprus
The individual must not have been a tax resident of Cyprus during the seven tax years immediately preceding the year in which employment or business activity begins. - Previous tax residency in Cyprus
Applicants must have been tax residents of Cyprus in at least one tax year before the seven-year non-residency period. - Tax residency following relocation
After commencing employment or business activity, the individual must become a tax resident of Cyprus.
Considering a Move Back to Cyprus?
Tax incentives such as this may play an important role for individuals considering returning to Cyprus to pursue professional opportunities or entrepreneurial activity.
The new provisions reflect the Government’s broader effort to encourage skilled professionals with prior connections to Cyprus to return and contribute to the country’s evolving business environment.
As with many tax incentives, the application of the exemption depends on specific eligibility criteria, including tax residency status, the timing of employment or business activity, and minimum income thresholds, as set out in Article 8(21B) of the Income Tax Law.