Tax deductions and exemptions amounting to €2 billion. granted by the state from 2021 to 2024, to attract professionals from abroad to Cyprus. A total of 46,605 employees of 48 or more nationalities, who worked abroad and moved to Cyprus, took advantage of the tax incentives during this period. It is noteworthy that in the three-year period 2021-2023 the value of discounts amounted to €1.3 billion, while in 2024 it decreased to €724.6 million.
In detail, in 2021 a total of 9,794 employees claimed discounts of €228.5 million, while in 2022 the number of employees almost doubled, as 15,449 took advantage of tax incentives and benefited €442.5 million. In 2023, the number of employees increased to 20,191, receiving discounts of €647.1 million, while in 2024 another 21,328 received tax reductions of €724.5 million.
According to official data submitted to the Parliament, 42.2% of the "golden minds" who moved to Cyprus were Russians, who claimed tax deductions of €869.2 million, an amount corresponding to 43.5% of the total tax exemptions.
Under the current legal regime, tax exemptions of 20% to 50% are granted, while the Government expects to increase the number of imported talents through the "Minds in Cyprus" bill, which will be put before the parliamentary Finance Committee again tomorrow, with the aim of completing its discussion and taking it to the Plenary Session of the Parliament for approval in the coming weeks.
The provisions of the bill
The bill provides for the granting of tax incentives and other facilities, with the aim of moving skilled workers to the Republic and repatriating Cypriot citizens. The bill aims to expand and improve the existing tax framework, which has been legislated in 2022, making it more attractive, flexible and accessible.
Specifically, the tax exemption is increased from 20% to 25% of the remuneration from the first employment and the maximum amount of tax exemption from €8,550 to €30,000. Also, the required period of stay outside the Republic to receive the exemption is reduced from 15 to 7 years. A condition is introduced that the taxpayer did not have tax residence in the Republic during any year of the seven years preceding the application.
The framework will apply either to persons who have worked abroad for a period of at least 84 months (7 years) without a degree, or to persons who have worked for at least 36 months outside the Republic and have a degree, recognized in terms of equivalence by KYSATS.
The Government wants the bill to be approved before the Parliament closes next April, ahead of the parliamentary elections in May, so that other foreign workers can take advantage of the additional tax incentives. The Government has already presented the plan to Great Britain, in the presence of many Cypriots who work abroad and wish to return to Cyprus with their families.
Most from third countries
From the analysis of the updated data transmitted to the Parliament by the Ministry of Finance, it appears that most of those who benefited from the tax reductions were foreign workers, with the majority coming from third countries, such as Russia, Ukraine, Lebanon, Israel, the United Kingdom, the USA, China and Australia. It is worth noting that 80% of the foreign workers who took advantage of the tax measures include European citizens.
Only 19.6% of the beneficiaries were Cypriots, who took advantage of the tax incentives of the current regime, claiming tax exemptions and tax reductions amounting to €371 million, a percentage corresponding to 18.6% of the revenue loss for the state.
"F" processed the data of the Ministry of Finance and it appears that 19.659 Russian workers took advantage of the tax incentives from 2021 to 2023, while almost the same number used them in 2024. In addition, the tax deductions received by Russian nationals in 2024 accounted for 75% of the reductions granted in total in the previous three years.
Another important parameter of the data is that in 2024 the number of workers from Lebanon (472) and Israel (449) who benefited from the tax reductions was slightly higher compared to the period 2021-2023, when the corresponding numbers amounted to 441 and 552.
The top ten
In detail, from 2021 to 2024, the tax measures utilized the following imported talents:
∙ Russians are in first place, as a total of 19,659 employees claimed tax deductions of €869.2 million.
∙ Cypriots are in second place, as 9,132 employees working in foreign companies moved to Cyprus and received tax deductions of €371 million.
∙ In third place are 4,585 Greeks, who moved to work in our country, receiving tax reductions of €162.7 million.
∙ Another 2,741 Ukrainian workers took advantage of the tax incentives, claiming €100.6 million in rebates.
∙ A total of 1,607 workers from Belarus received tax exemptions of €71 million.
∙ A total of 1,001 professionals from Israel received tax deductions of €73.3 million.
Another 913 from Lebanon took advantage of the incentives, claiming tax reductions of €31.6 million.
∙ 785 professionals working in Great Britain benefited from tax reductions of €64 million.
∙ The number of workers from India who used the tax incentives amounted to 704, with tax deductions of €30.9 million.
∙ The top ten is completed by 433 workers from Germany, who received tax reductions of €21.4 million.
Therefore, 89.2% of employees who received tax deductions in the four-year period are included in the top ten countries. In total, they received tax reductions of €1.79 billion. At the same time, more than 5,000 workers come from countries other than the ten, receiving tax reductions that exceeded €200 million.
The economic employment activities of the... imported
Of the total taxpayers who have taken advantage of the tax incentives, the majority work in the information and communication sector (including the software sector), in scientific and technical activities, as well as in financial and insurance activities.
In detail, the ten economic activities with the most employees that benefited from the incentives are as follows:
• 17,497 information and communication workers received exemptions of €739.4 million.
• 11,240 employees in scientific and technical activities received discounts of €495.9 million.
• 4,276 employees in retail and wholesale trade and vehicle repairs received tax reductions of €51.1 million.
• 3,675 employees in financial and insurance activities received exemptions of €124.5 million.
• 3,361 employees in administrative activities received tax exemptions of €139.7 million.
• 1,223 employees in the transport and storage sector received discounts of €63.1 million.
• 1,228 construction workers received discounts of €28.5 million.
• 1,364 employees in public administration and defense received discounts of €65.2 million.
• 851 workers in activities related to human health and social care received exemptions of €38 million.
• 859 employees in the education sector received discounts of €28.8 million.
