On 6 March 2026, a tax exemption for repatriation, part of the “Minds in Cyprus” initiative, was published in the Official Gazette of the Republic of Cyprus. The initiative was approved by the Council of Ministers back in 2025, based on a dedicated action plan, designed to encourage talented professionals from abroad to return to Cyprus and contribute to the country’s economic development.1,2
WHY THIS MATTERS
The objective of the initiative is to leverage the global expertise and skills of talented professionals residing and working abroad, who were previously Cyprus tax residents, by offering a tax incentive, alongside other support measures, to facilitate their re-integration into both Cypriot society and the local workforce.
The tax exemption complements the existing framework of incentives available to individuals relocating to Cyprus to commence first employment, under Articles 8(21A) and 8(23A) of the legislation. The newly introduced tax exemption under Article 8(21B) is effective from 1 January 2025.
Overview
Under the new provisions of the Income Tax Law, this exemption is available to both employees and self-employed individuals, who commenced their professional activities in Cyprus after 1 January 2025, provided that their annual employment income or business profits exceed the threshold of EUR 30,000 per annum, for the duration of claiming the incentive.
Key Highlights
Eligible individuals are granted an exemption from taxation of 25 percent of their gross annual employment income or annual business profits, capped at a maximum of EUR 25,000 per annum. This exemption applies for a seven-year period, commencing from the year the individual takes up employment or a business activity in Cyprus. Moreover, to qualify for the exemption, an individual will need to cumulatively meet the following conditions:
- The individual is a Cyprus tax resident (except for the year of commencement of the employment or self-employment in Cyprus, during which the individual may be either a Cyprus tax resident or a non-Cyprus tax resident).
- The individual has not been a Cyprus tax resident for at least seven consecutive years prior to the commencement of the employment or self-employment in Cyprus.
- The individual had been a Cyprus tax resident at some point before the required seven-year period of non-Cyprus tax residency (as per point 2. above).
- The individual had been employed full-time outside of Cyprus, by a non-Cyprus tax resident employer:
- For individuals holding a university degree, at least 36 months (three years) within a period of 84 months (seven years) preceding the month of commencement of the professional activities in Cyprus.
- For individuals not holding a university degree, 84 months (seven years) preceding the month of commencement of the professional activities in Cyprus.
- For individuals holding a university degree, at least 36 months (three years) within a period of 84 months (seven years) preceding the month of commencement of the professional activities in Cyprus.
KPMG INSIGHTS
The introduction of the new tax exemption under Article 8(21B) is a significant development. This initiative is strategically designed to complement the existing tax framework available to individuals who relocate to Cyprus to commence first-time employment, as well as to individuals who were previously Cyprus tax residents, who developed or progressed their professional careers abroad, and who now wish to repatriate to Cyprus.
Furthermore, the new exemption introduces a notable enhancement in relation to the eligible activities that can be undertaken in Cyprus in order to benefit from this incentive. More specifically, as per the provisions of Article 8(21B), both employment and self-employment activities can qualify for this incentive, in contrast with the other existing similar incentives under Articles 8(21A) and 8(23A), which are available only to employees. This development allows a broad range of professional arrangements to benefit from this regime, in line with the specific business circumstances of each individual.
Moreover, as this exemption can apply to eligible individuals earning just over EUR 30,000 per annum, this incentive may be available to a broad range of eligible individuals across various income levels, and not only to high earners, thereby supporting its applicability to a wide spectrum of qualifying taxpayers.
With the benefits of this exemption in mind and taking into account the recent increase in the tax-free threshold to EUR 22,000, as well as the adjusted income tax bands applicable to individuals, taken together, these changes may enhance the personal tax regime now in place for individuals who wish to repatriate to Cyprus to continue their professional careers in a tax-efficient manner.
If assignees and/or their programme managers are considering or are already implementing global mobility or workforce arrangements involving Cyprus, they might wish to consider the potential implications of these changes on individual tax positions, employer compliance obligations, and internal policies, and seek professional advice as appropriate (see the Contacts section).
ENDNOTE:
1 Republic of Cyprus Official Gazette, CyLaw website (in Greek), “Ο περί Φορολογίας του Εισοδήματος (Τροποποιητικός) Νόμος του 2026 εκδίδεται με δημοσίευση στην Επίσημη Εφημερίδα της Κυπριακής Δημοκρατίας σύμφωνα με το Άρθρο 52 του Συντάγματος,” published on 6 March 2026.
2 For more details on the initiative, please check, Minds in Cyprus.
RELATED RESOURCE
This article is excerpted, with permission, from “Income tax exemption for repatriation to Cyprus" in Tax Alert, a publication of the KPMG International member firm in Cyprus.
Tax Services in Cyprus
George Markides Board Member, Head of Tax Services george.markides@kpmg.com.cy | Katia Papanicolaou Board Member, Direct Tax Services Katerina.Papanicolaou@kpmg.com.cy |
Costas Markides Board Member, International Tax services costas.markides@kpmg.com.cy | Michael Halios Board Member, International Tax services michael.halios@kpmg.com.cy |
Michalis Loizides Board Member, Tax Services michalis.loizides@kpmg.com.cy |
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Contacts
Disclaimer
The information contained in this newsletter was submitted by the KPMG International member firm in Cyprus.
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