On 6 March 2026, the Republic of Cyprus published the amending Income Tax Law 17(I)/2026 in the Official Gazette. The legislation introduces a new provision, Article 8(21B), establishing a 25% income tax exemption specifically designed for Cypriot professionals who have been living and working abroad and wish to return home.
This article sets out the key features of the new exemption, the conditions that must be met, and how it interacts with the existing exemption under Article 8(21A).
Background: The Brain Gain Initiative
The new law is part of the Government’s “Minds in Cyprus – The Brain Gain Initiative,” a broader policy effort to reverse the talent drain that Cyprus has experienced in recent years and attract skilled Cypriot nationals back to contribute to the local economy.
The provisions apply to both employees and self-employed individuals and are effective retroactively from 1 January 2025. Any qualifying employment or business activity commencing up to and including the 2030 tax year falls within the scope of the new law.
What the 25% Exemption Covers
Under Article 8(21B), a qualifying individual is entitled to a 25% exemption on:
- Remuneration received from employment carried out in Cyprus, or
- Profits derived from a business carried on in Cyprus.
The exemption is subject to a cap of €25,000 per annum. It applies for the tax year in which employment or business activity begins and for each of the six following tax years, provided that the individual’s income or profits from Cyprus exceed €30,000 in each year.
The exemption is available only once in an individual’s lifetime and cannot be combined with the exemption under Article 8(21A) in the same tax period.
To benefit from Article 8(21B), an individual must satisfy all of the following conditions simultaneously:
Eligibility Conditions
| Eligibility Requirements — Article 8(21B) | |
| Tax Residency | Must be a Cyprus tax resident (not required in the year employment or business commences) |
| Commencement Window | Employment or business activity must start 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 for at least one tax year before that 7-year period |
| Qualification | Must satisfy at least one of the two conditions set out in Article 8(21B) – see below |
Qualification Criteria — At Least One of the Following Must Apply:
- Holds a university degree recognised by the Cyprus Council of Recognition of Higher Education Qualifications (KYSATS) and was employed on a full-time basis outside Cyprus by a non-Cypriot tax resident employer for a minimum of 36 months within the 84-month period immediately 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 immediately preceding the commencement of employment or business activity in Cyprus.
Article 8(21A) vs Article 8(21B): Which Applies to You?
The two exemptions are mutually exclusive, an individual who elects to benefit from Article 8(21B) cannot also claim the exemption under Article 8(21A) for the same period. It is therefore important to assess both options carefully before making an election.
Article 8(21A) is generally more relevant to individuals commencing their first employment in Cyprus who earn under €55,000. Article 8(21B) targets returning Cypriot professionals with a stronger earnings profile and offers a more substantial benefit — both in terms of the exemption rate and the annual cap.
In each case, the right choice will depend on the individual’s specific income level, employment history, and tax position. Professional advice is strongly recommended before making an election.
Ready to Return to Cyprus?
Arcisco’s tax compliance team can assess your eligibility under Article 8(21B), compare it against Article 8(21A), and help you structure your return in the most tax-efficient way.
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