By Kevin Austin
In today’s globalised economy, highly skilled professionals are exploring destinations that offer tax benefits, career opportunities, and long-term stability. Cyprus has become a desirable option within the European Union, thanks to its improved non-domicile regime, residency options, and full alignment with the EU Blue Card Directive. The island has established itself not just as a low-tax area but as a lively hub where careers, businesses, and lifestyles prosper together.
Since its introduction in 2016, Cyprus’s non-domicile regime has been one of the most attractive options within the EU, welcoming international entrepreneurs, high-net-worth individuals, and mobile professionals. The system works under the combined provisions of the Income Tax Law 118(I)/2002 and the Special Defence Contribution Law 117(I)/2002, with “domicile” defined by the Wills and Succession Law, Cap.195. This means that Cyprus tax residents who are not deemed domiciled under succession law can enjoy an exemption from the Special Defence Contribution on dividends, interest, and rental income.
The absence of capital gains tax on shares, under the Capital Gains Tax Law 52/1980, remains a key feature of the system, with only Cyprus-based real estate included in the tax scope. Additionally, the current legal setup offers a generous 50 per cent exemption on employment income over €55,000 for up to 17 years. This benefit, outlined in Article 8(23A) of the Income Tax Law, applies to individuals starting their first job in Cyprus after a period of non-residency.
The proposed 2025 tax reforms, which have been submitted to Parliament and are currently under review but not yet enacted into law, aim to modernise this framework, though the specifics have evolved from earlier discussions. While the 17-year cap for the non-domicile status (which grants the exemption from the Special Defence Contribution on dividends and interest) remains, a new proposal seeks to allow individuals to extend this benefit beyond 17 years for up to two additional 5-year periods by paying a lump-sum fee of €250,000 for each extension, offering a sense of long-term planning stability. Employment income rules are also being looked at, with a proposal to modestly increase the general tax-free threshold from €19,500 to €20,500 and introduce new deductions related to family life, mortgage interest or rent on a primary residence, and green investments for qualifying households. If these changes are approved—which are expected to take effect on January 1, 2026—they will help modernise Cyprus’s non-dom framework while maintaining its strategic advantages.
Cyprus’s attractive regime shares two main pathways for residency under the Income Tax Law: the 183-day rule and the 60-day rule for those with economic ties who aren’t tax residents elsewhere. The government’s 2025 reform aimed to expand the 60-day rule to include individuals whose primary business interests are in Cyprus, even if they spend only a little time physically here. However, this proposal was rejected by parliament, and as a result, the current 60-day rule, which requires a minimum stay, a permanent home, and active local business or employment, remains the standard route for those looking for quick tax residency. For digital nomads, startup founders, and international executives, this evolution maintains a flexible tax-residency model that acknowledges modern mobility.
Cyprus has recently made some great updates to its immigration laws through the Aliens and Immigration (Amendment) Law 111(I)/2024, turning Directive (EU) 2021/1883 into national law. Since July 7, 2025, highly skilled third-country nationals have been able to apply for the EU Blue Card in Cyprus. This opens up access to the EU labour market under harmonised conditions, making it an exciting prospect for professionals.
To qualify, applicants need a university degree or equivalent experience, a confirmed job offer in ICT, pharmaceutical R&D, or shipping, and a minimum yearly salary of €43,632. The Blue Card grants residence, employment, social security rights, family reunification, EU travel, and mobility after 12 months in Cyprus.
Combining the Blue Card with Cyprus’s attractive non-dom tax incentives creates a strong mix of financial benefits and professional mobility across Europe, making it an appealing option for talented individuals seeking new opportunities.
Cyprus is actively developing a forward-looking framework designed to attract global talent and businesses. By intelligently combining key legal regimes—including the Income Tax, Special Defence Contribution (SDC), and Capital Gains Tax Laws—with the EU Blue Card system, the island offers international professionals a coherent and appealing environment. This strategy ensures long-term certainty, exemplified by the proposed option to extend non-dom SDC benefits beyond 17 years for a lump-sum fee.
Importantly, the current tax residency rules (the 60-day and 183-day tests) remain unchanged, as the proposal to simplify residency based solely on “economic substance” was dropped. Although the corporate income tax rate is proposed to rise from 12.5% to 15% to align with global standards, the country’s strong investment incentives, such as the Intellectual Property (IP) Box, Notional Interest Deduction (NID), and the Tonnage Tax regime, will remain in place, ensuring Cyprus stays highly competitive.
At Access Financial, we have local Experts in Cyprus and will be glad to answer any questions. We offer comprehensive support not only with the Blue Card application process but also with identifying the most suitable engagement solutions in Cyprus, including Employer of Record, Agent of Record, and other compliant models.
