New Personal Income Tax Relief for Returning Professionals

Tax Update: New Personal Income Tax Relief for Returning Professionals – Article 8(21B)

Cyprus is offering a new tax incentive designed to encourage skilled professionals and experienced employees who have worked abroad to return and contribute to the local economy. This initiative, called the “Minds in Cyprus” Brain Gain Program, aims to make relocation back to Cyprus attractive for qualified individuals.

Introduced in the Official Gazette on 6 March 2026 and governed by Article 8(21B) of the Cyprus Income Tax Law (Law 118(I)/2002), the measure allows eligible returnees to benefit from a 25% tax reduction on their income from employment or business activities in Cyprus. The maximum annual exemption is €25,000, and it may be applied for up to seven years.

The rules under Article 8(21B) are retroactive to 1 January 2025 and apply to both employees and self-employed individuals, in contrast to Articles 8(21A) and 8(23B), which cover employment income only.

The new provisions will apply to individuals who meet all of the following conditions:

1. Tax residency – The individual is a Cyprus tax resident, except in the year they start employment or business activities in Cyprus.
2. Employment or business start date – The individual began working or conducting business in Cyprus between 1 January 2025 and 2030.
3. Income threshold – During the first 12 months of employment or business, their income exceeds €30,000.
4. Prior residency – The individual was not a Cyprus tax resident in the seven (7) years prior to starting employment or business in Cyprus.
5. Earlier residency – The individual was a Cyprus tax resident in any year before the seven-year period mentioned above.
6. Professional experience – The individual meets at least one of the following:
   
   • Holds a recognized university degree and was employed full-time abroad for at least 36 months within the 84 months preceding their return; or
   • Was employed full-time abroad for the 84 months immediately before starting employment or business in Cyprus.

Additional provisions:

• The exemption applies in the year the individual starts employment or business and for the following six (6) tax years, provided annual income exceeds €30,000.
• If an individual claims the Article 8(21B) exemption, they are not eligible for the Article 8(21A) exemption.
• The exemption is granted once in a lifetime for eligible individuals during the period this article is in effect.

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This new exemption marks a significant step forward, aiming to attract skilled professionals back to Cyprus and strengthen the local economy. It is broadly inclusive, covering nearly all eligible individuals across income levels, not just high earners, making it relevant for a wide range of taxpayers.

Combined with the recent rise of the tax-free threshold to €22,000 and updated income tax brackets, Cyprus now offers a highly attractive personal tax framework. For those looking to return, it provides a unique opportunity to advance their careers while benefiting from a tax-efficient environment.

Contact us to find out if you qualify and how this exemption could work for you.

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