Cyprus's 'Minds in Cyprus' Initiative Faces Skepticism Amidst Tax Break Rollout

Cyprus Launches 'Minds in Cyprus' to Attract Diaspora Talent

Cyprus has launched the 'Minds in Cyprus' program, a comprehensive initiative designed to entice skilled Cypriots and other professionals living abroad to return to the island. The government's objective is to reverse the long-standing 'brain drain' and inject fresh talent into critical sectors such as Information and Communication Technology (ICT), health, education, and green technology. The Cabinet approved legislation for the enhanced incentives on April 24, 2025, with the official campaign launching in London in May 2025.

Enhanced Tax Incentives and Eligibility

The core of the 'Minds in Cyprus' program includes significant tax benefits aimed at making repatriation financially attractive. Key provisions include:

• An increase in income tax exemptions from 20% to 25% of employment income.
• A rise in the maximum annual tax relief from €8,550 to €25,000.
• A reduction in the required overseas residency period from 15 years to 7 years after completion of studies for eligibility.
• More flexible employment criteria, now accepting 36 months of foreign work experience within the past five years, rather than three consecutive years.
• Tax exemptions will continue regardless of employer changes, addressing previous limitations on job mobility.

These benefits are specifically targeted at professionals and scientists who return after working abroad for at least seven years following their studies. Separately, existing tax incentives for foreign employees include a 50% tax deduction for those earning over €55,000 annually, extended to 17 years for new employees from January 1, 2022.

Skepticism and Concerns Over Inequality and Housing

Despite the government's ambitious goals, the initiative has been met with skepticism from some returnees and critics, who raise concerns about potential inequality and the ongoing housing crisis. Pavlos Kleanthous, a Cypriot who returned 12 years ago, voiced a common sentiment, stating, 'It's not fair for any local' when comparing the benefits offered to returning professionals versus those who remained in Cyprus. Critics argue that the tax system, particularly these new incentives, could exacerbate wealth inequality by disproportionately favoring high earners and corporations.

The country also faces a significant housing crisis, characterized by rising rents, construction costs, and loan payments, making homeownership increasingly difficult. According to Eurostat data from 2023, 11.2% of Cypriots reported experiencing housing difficulties, a figure notably higher than the EU average. Some Members of Parliament have also questioned the broad definition of 'talent' within the bill and expressed surprise that the incentives extend to non-Cypriots, not solely the diaspora.

Government's Response and Broader Strategy

The Cypriot government acknowledges these challenges and asserts that the tax incentives are temporary, designed to offset relocation costs rather than create permanent disparities. Deputy Minister Irene Piki has addressed housing concerns, noting modifications to schemes that now allow returnees immediate access to grants for young couples under 41, by abolishing a previous two-year residency requirement. The government has also launched seven housing schemes within the past two years.

Beyond tax breaks, the 'Minds in Cyprus' program includes non-legislative incentives related to education and healthcare, streamlined citizenship procedures for spouses, and accelerated registration for healthcare professionals. President Nikos Christodoulides emphasized that the initiative is part of a broader strategy to strengthen the economy, attract quality investments, and boost citizens' disposable income, with a comprehensive tax reform process expected to conclude by August 2025 and take effect in early 2026.