Tax reductions totalling €406.6 million benefited 25,277 workers who moved to Cyprus from abroad between 2021 and 2023, taking advantage of fiscal incentives offered by the state through deductions and tax exemptions on their income.
The figures cover salaries totalling €1.31 billion received by these workers, with tax exemptions ranging from 20% to 50% under the current legal framework.
The data was presented to Parliament during Monday’s discussion at the House Finance Committee on the “Minds in Cyprus” bill, which provides for tax exemptions for persons working abroad to relocate to Cyprus for employment.
Russians lead beneficiaries
Of the 25,277 workers who benefited from tax deductions, only 5,292 were Cypriots, who received tax reductions of €84.8 million on salaries of €263.6 million.
Russian workers topped the list, receiving tax exemptions worth €156.9 million on earnings of €513.8 million. Cypriots came second with exemptions of €84.8 million.
In third place were 2,825 workers from Greece, who benefited from tax reductions of €32.9 million on incomes of €111.1 million.
Other significant beneficiaries included:
- 1,339 Ukrainian workers with earnings of €59.2 million received tax deductions of €17.9 million
- 781 people from Belarus had tax exemptions of €13.6 million
- 552 employees from Israel had tax benefits of €17.4 million from total incomes of €52.5 million
- 479 British workers benefited from tax deductions of €15.7 million on taxable income of €47.6 million
- 441 workers from Lebanon, with salaries of €18.4 million, had tax relief of €5.4 million
- 409 workers from India “saved” €5.5 million from total earnings of €19.8 million
- 259 from Germany with salaries of €15.4 million had tax exemptions of €4.9 million
- 239 workers from Italy with salaries of €12.8 million benefited by €4 million
- 201 workers from France with earnings of €18.9 million received deductions of €6.8 million
IT and scientific activities dominate
Analysis of taxpayers who utilised the tax incentives shows the majority work in information and communication (including software), scientific activities, and financial and insurance activities.
The ten economic activities with the most workers benefiting from incentives were:
- 9,060 workers in information and communication received exemptions of €136.4 million on total incomes of €450.2 million
- 5,973 in scientific and technical activities, with total earnings of €310.7 million, received deductions of €96.5 million
- 2,347 workers in financial and insurance activities, with earnings of €182.5 million, received tax exemptions of €59.2 million
Other sectors included administrative activities (1,615 workers), retail and wholesale trade and vehicle repairs (1,366 workers), water supply and sewage treatment (868 workers), transport and storage (760 workers), public administration and defence (758 workers), education (476 workers), and health and social care (415 workers).
Legal profession raises concerns
During Monday’s continuation of the Finance Committee discussion on the bill providing incentives for talents to work in Cyprus, the Bar Association expressed concerns about unequal treatment of taxpayers.
Maria Grigoriou, representing the legal profession, spoke of unequal treatment of taxpayers, which was rejected by the Legal Service representative.
According to lawyers, the scheme “reinforces brain drain because it’s like telling specialised personnel in Cyprus to go abroad for a few years so they can subsequently claim tax exemption”.
She also noted that no public consultation took place, requesting changes to specific articles. Finance Committee members emphasised the need to re-examine some provisions of the bill.
