On 6 March 2026, the amending Income Tax Law 17(I)/2026 was published in the Official Gazette of the Republic of Cyprus. The legislation introduces Article 8(21B), a new income tax exemption aimed at attracting Cypriot professionals back to the island.
What Is the Brain Gain Initiative?
The amending Law forms part of the Government’s “Minds in Cyprus – The Brain Gain Initiative.” Its purpose is to provide targeted tax incentives for talented Cypriot nationals living abroad to return and contribute to the local economy.
The new provisions apply to both employees and self-employed individuals and take effect retroactively from 1 January 2025. They remain in force for any employment or business activity commencing up to and including the 2030 tax year.
The 25% Tax Exemption – Key Details
Under Article 8(21B), qualifying individuals are entitled to a 25% income tax exemption on:
- Remuneration received from employment in Cyprus, or
- Profits from a business carried on in Cyprus.
The exemption is capped at €25,000 per annum and is available for the tax year in which employment or business activity begins, plus the following six tax years , provided that income or profits exceed €30,000 in each of those years.
The exemption may be claimed only once in an individual’s lifetime. If Article 8(21B) is applied, the separate exemption under Article 8(21A) cannot be claimed for the same period.
Eligibility Conditions
To qualify, an individual must cumulatively satisfy all of the following conditions:
| Eligibility Conditions at a Glance | |
| Tax Residency | Must be a Cyprus tax resident (not required in the year employment/business commences) |
| Commencement Window | Employment or business activity must begin between 1 January 2025 and 31 December 2030 |
| Income Threshold | Minimum €30,000 in employment income or business profits within the first 12 months |
| Prior Non-Residency | Must not have been a Cyprus tax resident in the 7 tax years immediately preceding commencement |
| Prior Cyprus Residency | Must have been a Cyprus tax resident in at least one tax year before the 7-year period |
| Qualification Requirement | Must satisfy at least one of the two conditions under Article 8(21B) (degree + experience or continuous employment abroad) |
Additionally, the individual must meet at least one of the following:
- Holds a university degree recognised by the Cyprus Council of Recognition of Higher Education Qualifications (KYSATS), and was employed full-time outside Cyprus by a non-Cypriot tax resident employer for at least 36 months within the 84-month period preceding the commencement of employment or business activity in Cyprus; or
- Was employed full-time abroad by a non-Cypriot tax resident employer for a continuous period of 84 months preceding the commencement of employment or business activity in Cyprus.
Choosing Between Two Cyprus Tax Benefits (Article 8(21A) vs 8(21B))
The law clearly provides that the exemptions under Article 8(21A) and Article 8(21B) cannot be used at the same time. An individual who elects to benefit from the 25% exemption under Article 8(21B) is not entitled to also apply the exemption under Article 8(21A).
Article 8(21A) grants a 20% income tax exemption, capped at €8,550 per year, for individuals who commence their first employment in Cyprus after 26 July 2022 and earn less than €55,000 annually.
Accordingly, it is important to assess both regimes carefully, as only one of the two exemptions can be applied, and the most beneficial option should be selected.
Ready to Return to Cyprus?
Altus Citadel’s tax advisors can help you assess your eligibility and structure your return to maximise available exemptions .Contact us at info@altuscitadel.com or +357 22 252 774.
