in-cyprus 29 June 2025 - by Eleftheria Paizanou
The saying, “A rising tide lifts all boats” perfectly describes the “Minds in Cyprus” bill, which aims to grant tax exemptions to individuals working abroad to incentivize them to relocate to Cyprus for work.
Initially, the government, in a commendable communication effort, claimed that this measure would contribute to the repatriation of Cypriot talents working abroad, offering them tax deductions as an incentive to return. They even held a major event in London, where the President of the Republic himself presented the plan to numerous Cypriots working abroad, even before it was approved by the Cypriot Parliament.
However, the reality has proven to be different. This plan doesn’t just concern Cypriots, but also employees from European and third countries. Essentially, it’s a modification of an existing scheme that already offers generous tax exemptions ranging from 20% to 50% of income.
These schemes were first implemented in August 2011, during the severe economic crisis that hit the island. At that time, to enhance Cyprus’s competitive position as a financial services center, the government offered tax exemptions to attract high-earning foreign workers to Cyprus.
It’s worth noting that, despite long-standing reservations from various parties and organizations regarding the scheme’s implementation due to its “grey areas,” it continued to be regularly applied and often modified. In fact, successive governments made changes to the scheme, leading many businesses to transfer their operations and employees to Cyprus.
State coffers also benefited significantly, as the activities of many foreign companies on the island increased government revenues.
Disagreements and Concerns over Inequality
Today, the recent changes to the scheme have sparked considerable disagreements from involved parties. During the parliamentary debate on the bill, they spoke of unequal treatment of taxpayers.
A characteristic stance was that of the representative of the Pancyprian Bar Association, who argued that the bill “enhances ‘brain drain,’ because it’s like telling skilled personnel in Cyprus to go abroad for a few years so they can then claim tax exemption.”
Cypriot employees already in Cyprus share this concern and reservation, wondering if they need to move abroad to benefit from favourable tax reform.
Nevertheless, data provided by the Tax Department to Parliament, following requests from political parties, clearly show that during the 2021-2023 period, the scheme was primarily utilized by foreigners, with most coming from third countries. Specifically, the tax reduction benefiting 25,277 workers who were working abroad and came to Cyprus to continue their careers amounts to €406.6 million.
The tax deductions granted to beneficiaries were on their incomes, as they had received salaries totalling €1.31 billion. From the analysis of the data, it appears that out of the 25,277 employees who benefited from tax deductions, only 5,292 are Cypriots, who received tax reductions amounting to €84.8 million for salaries of €263.6 million.
The most deductions were received by 9,864 Russians, totalling €157 million, followed by Cypriots and Greeks. In the subsequent positions are employees from Ukraine, Belarus, Britain, Lebanon, Israel, and India, who received tax deductions of around €80 million.
Employees from other countries also followed. While it’s certainly not bad to offer tax incentives to attract high-ranking executives of foreign companies to Cyprus, it would be more fair and proper for some of these regulations to also apply to Cypriot employees.
In this way, the state creates inequalities and two categories of workers. Granting generous exemptions to attract workers to the island is a good measure, but Cypriot workers should not be sidelined.
