According to official data from the Ministry of Finance of Cyprus, the majority of tax incentives provided during 2021–2023 went to non-Cypriot residents. The program, originally designed to encourage Cypriots to return from abroad, has in practice become a tool to attract foreign specialists.
Over three years, 25,277 individuals received tax relief totaling €406.7 million, of which almost 20,000 were foreigners — accounting for 79% of all benefits. Cypriots made up only 21% of participants, approximately 5,300 citizens.
The main beneficiaries were specialists from Russia, Greece, and Ukraine. Russians alone accounted for 39% of all applicants, reflecting the strong interest among expatriates in Cyprus’s tax system, particularly in the finance, IT, and consulting sectors.
Where Tax Benefits Are Concentrated
Analysis of the data shows that the program aimed at employment stimulation and investment attraction provided the greatest benefits to high-tech and international sectors. Over 70% of all tax deductions went to three key industries:
- Information technology and communications
- Professional and technical services
- Financial sector
IT companies and tech startups claimed tax relief exceeding €450 million, roughly one-third of all incentives. Legal, accounting, and consulting firms, employing many foreign specialists, also received a significant share. Financial and insurance companies obtained more than €59 million in deductions.
These figures confirm that tax incentives contributed to the growth of innovative sectors, but they have also sparked discussion about the need to balance the interests of foreign workers and returning Cypriots.
New Legislation: Focus on “Smart Return”
In early 2025, the Cypriot government began updating the legal framework for the “brain gain” program, which aims to bring Cypriot professionals back from abroad and attract qualified talent. The initial draft law, submitted in May, sparked debate and was temporarily postponed for revision.
In autumn 2025, a revised document was submitted to Parliament — the Income Tax (Amendment No. 3) Law 2025 — introducing several key changes:
- The program now includes both salaried employees and self-employed specialists.
- A minimum income of €30,000 per year is required to prevent participation without genuine economic activity.
- Applicants must be former Cyprus residents who lived abroad for at least seven years and hold work experience or a degree recognized by the Cyprus Accreditation System (KYSATS).
The new scheme provides 25% tax exemption on income or profits (up to €25,000 per year) for seven years from the date of return or start of activity on the island. The law applies to income earned from January 1, 2025, onwards.
Cyprus Seeks Balance Between Foreign and Local Specialists
While foreigners continue to benefit actively from tax incentives, authorities aim to adjust the program to better meet its original goal — bringing back Cypriot professionals and supporting the domestic labor market.
The Minister of Finance emphasized that Cyprus seeks to create a competitive yet fair system that attracts international talent while protecting the interests of local professionals. In 2026, a digital platform is planned for registering program participants, enhancing transparency and oversight of the benefits granted.
Parliamentary discussions on the new bill are ongoing. The updated program is expected to become part of Cyprus’s national strategy to transform the island into a regional hub for innovation, finance, and high technology, while creating fairer conditions for returning Cypriots.