In today’s globalised economy, highly skilled professionals are in search of destinations that combine tax efficiency, career mobility and long-term stability. Cyprus is fast emerging as one of the most captivating choices within the European Union. With its upgraded non-domicile regime, evolving residency rules and full alignment with the EU Blue Card Directive, the island is positioning itself not merely as a low-tax jurisdiction, but as a vibrant centre where careers, businesses and lifestyles can thrive without compromise.

The Evolution of the Non-Dom Regime

Since its introduction in 2016, Cyprus’s non-domicile framework has been one of the most attractive in the EU, appealing to international entrepreneurs, high-net-worth individuals and mobile professionals. The regime operates 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 ensures that Cyprus tax residents who are not considered domiciled under succession law are exempt 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, further enhances the regime, with only Cyprus-situated real estate caught within the tax net. Current rules also provide a 50 per cent exemption on employment income exceeding €55,000 for up to 17 years, as set out in Article 8(23A) of the Income Tax Law.

The proposed 2025 reforms aim to extend this framework. Instead of a 17-year cap, non-dom status could be maintained indefinitely through an annual fee, providing long-term planning certainty. Employment income rules are also being reviewed, with a higher tax-free threshold of €20,500 and new deductions linked to family life, mortgage interest and green investments. Together, these changes modernise Cyprus’s non-dom framework while retaining its strategic advantages.

Redefining Tax Residency for a Mobile World

Cyprus currently offers two main residency routes under the Income Tax Law: the 183-day physical presence rule and the 60-day rule for individuals with economic ties who are not tax resident elsewhere. The government’s 2025 reform proposals envisage broadening the 60-day rule to include individuals whose centre of business interests lies in Cyprus, even with minimal physical presence. This shift recognises the growing importance of economic substance over physical relocation.

For digital nomads, startup founders and international executives, this evolution creates a flexible model of tax residency that acknowledges modern mobility while maintaining compliance through filings under both the Income Tax and Special Defence Contribution Laws.

The EU Blue Card Advantage

Cyprus has also updated its immigration law through the Aliens and Immigration (Amendment) Law 111(I)/2024, which converted Directive (EU) 2021/1883 into national legislation. From 7 July 2025, highly skilled third-country nationals can now apply for the EU Blue Card in Cyprus, securing access to the EU labour market on harmonised terms.

Eligibility requires a university degree or equivalent professional experience, a binding job offer in sectors such as ICT, pharmaceutical research and development or shipping, and a minimum annual salary of €43,632. Beyond residence and equal treatment in employment and social security, Blue Card holders enjoy family reunification rights, short-term EU travel and mobility to another Member State after 12 months in Cyprus.

When combined with Cyprus’s non-dom tax incentives, the Blue Card creates a uniquely powerful combination of fiscal efficiency and EU-wide professional mobility.

A Forward-Looking Framework for Global Talent

The interaction between these legal regimes, such as the Income Tax Law, Special Defence Contribution Law, Capital Gains Tax Law and EU Blue Card framework, creates a coherent environment for international professionals. Indefinite non-dom status offers long-term certainty, redefined residency rules reward economic substance, and the Blue Card system opens EU-wide mobility. Even with a proposed increase in corporate income tax from 12.5 to 15 per cent, other incentives such as the Intellectual Property Box, notional interest deductions and the tonnage tax regime remain intact.

Cyprus’s Place in the Future of Work

These reforms are more than incremental updates. They represent a carefully considered vision to make Cyprus a modern hub for talent, investment and innovation. By aligning its fiscal framework with contemporary working patterns and family needs, Cyprus is building a jurisdiction that balances opportunity, stability and compliance. For those seeking an EU base that offers both tax efficiency and mobility, Cyprus stands out as a country of choice, one where professional and personal ambitions can be achieved without compromise.

Our local Experts in Cyprus will be glad to answer any additional 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.

Do not hesitate to contact us via email at [email protected] or by phone Tel: +357 25 820 640.