New Article 8(21B) of the Income Tax Law

Key Provisions of the New Article 8(21B) of the Income Tax Law
 
On 6 March 2026, the amending Income Tax Law 17(I)/2026 was published in the Official Gazette of the Republic of Cyprus, introducing a new exemption under Article 8(21B) of the Income Tax Law.
 
The amendment provides a tax exemption of 25% (capped at €25,000 per annum) on the remuneration derived from employment exercised in Cyprus or on the profits of an individual carrying on a business in Cyprus, provided that the individual satisfies all of the following conditions.
 
Eligibility Conditions
The exemption applies to an individual who meets all the following criteria: 

• Except for the year in which the individual commences employment or begins carrying on a business in the Republic, the individual must be a tax resident of the Republic of Cyprus. 

• The individual must have commenced employment or business activity in Cyprus between 1 January 2025 and 31 December 2030. 

• During the first twelve (12) months following the commencement of employment or business activity, the individual must have employment income or business profits exceeding €30,000. 

• The individual must not have been a tax resident of the Republic during the seven (7) tax years immediately preceding the year in which employment or business activity commenced. 

• The individual must have been a tax resident of the Republic in at least one tax year prior to the seven-year period referred to above. 

In addition, the individual must satisfy at least one of the following conditions
 
A. University Degree and Employment Abroad 

• The individual must hold a recognized university degree, as acknowledged by the Cyprus Council for the Recognition of Higher Education Qualifications. 

• The individual must have been employed outside the Republic on a full-time basis for at least thirty-six (36) months within the eighty-four (84) months preceding the month in which employment or business activity in Cyprus commenced. 

B. Long-Term Employment Abroad 

• Alternatively, the individual must have been employed outside the Republic on a full-time basis for a continuous period of eighty-four (84) months preceding the month in which employment or business activity in Cyprus commenced. 

 
Duration of the Exemption
The tax exemption applies: 

• for the tax year in which the employment or business activity commences, and 

• for the six (6) immediately following tax years. 

Accordingly, the exemption may apply for a maximum period of seven (7) consecutive tax years.
For the exemption to continue to apply, the individual’s annual employment income or business profits must exceed €30,000 in each relevant tax year.
 
Restrictions 

• Where the exemption under Article 8(21B) is granted, the individual cannot simultaneously benefit from the exemption provided under Article 8(21A) of the Income Tax Law. 

• The exemption may be granted only once during the lifetime of the individual. 

 
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