More than 600 people currently working abroad have expressed interest in returning to Cyprus under proposed tax incentives and relocation measures aimed at attracting skilled workers and encouraging the repatriation of Cypriot professionals.
The figure was cited during a meeting of the Parliamentary Committee on Finance, which on Monday continued discussions on a revised bill providing tax incentives and other facilities for skilled employees and Cypriots working overseas.
A representative of the Ministry of Finance told MPs that there has been strong interest since the measures were announced, noting that more than 600 applications have already been submitted through a dedicated online platform.
Talent repatriation plan
“It appears that the measure is effective in attracting back people who chose to live abroad for a specific period in order to gain experience,” the ministry representative said.
Committee chair Christiana Erotokritou asked for a detailed profile of the applicants to be submitted to the committee.
The revised bill forms part of the government’s Talent Repatriation Plan, an initiative announced by the President of the Republic. Its aim is to expand and improve the existing tax framework introduced in 2022, making it more attractive, flexible and accessible, while broadening the tax base and allowing Cyprus to benefit from the skills and experience of returning professionals.
Under the current scheme, individuals who worked continuously for three years outside Cyprus for a non-resident employer are entitled to a 20 per cent tax exemption on employment income upon their first employment in Cyprus, capped at €8,550 per year. The exemption applies for seven tax years and is due to expire in 2027.
Exemptions
Under the proposed legislation, the exemption would increase to 25 per cent of income from employment or business activity, with a maximum annual exemption of €25,000. The scheme would also be extended to self-employed individuals.
To qualify for the 25 per cent exemption, applicants must have lived outside Cyprus for seven consecutive years and have previously been tax residents of the Republic. Their annual income from employment or business activity must exceed €30,000.
Additional conditions apply depending on educational background. Applicants holding a recognised academic qualification must have at least three years’ work experience abroad, while those without such qualifications must have worked overseas for at least seven years.
A separate 50 per cent tax exemption would apply to individuals who have lived abroad for 15 years, provided their annual employment income exceeds €55,000.
Concerns raised
Representatives of professional bodies broadly welcomed the incentives but raised concerns over fairness, retroactivity and the impact of recent tax reform. A representative of the Cyprus Bar Association warned that the bill provides for retroactive application from 1 January 2025, potentially benefiting individuals who returned to Cyprus earlier in the year without the scheme in place.
She said the issue of retroactivity required careful consideration, particularly in light of broader tax reform that has significantly altered income thresholds and tax rates, arguing that individuals with similar profiles could end up being taxed differently depending on when they returned.
Concerns were also raised about whether the scheme sufficiently targets sectors where expertise is most needed. Suggestions included linking eligibility to the relevance of overseas experience to the applicant’s employment in Cyprus.
Unlawful?
A representative of the Legal Service said the bill does contain an element of retroactivity but does not appear to be unlawful.
Speaking after the meeting, AKEL MP Andreas Kavkalias said his party supports incentives for the repatriation of Cypriots working abroad but stressed that proposals must be fair, balanced and socially beneficial. He criticised the lack of prior evaluation of existing legislation and called on the government to also support Cypriot scientists and professionals who have chosen to build their careers in Cyprus.
DIKO MP Alekos Tryfonides said his party supports the government’s efforts to bring Cypriot talent back from abroad, adding that incentives should be reviewed and strengthened following tax reform. He stressed the need to create quality jobs with fair pay and prospects, both for returning professionals and for young Cypriots who studied and chose to remain in the country.
The Ministry of Finance is expected to respond to the committee’s concerns as deliberations on the bill continue.