T&L D-briefs - March 2026
T&L D-briefs is a bi-monthly tax and legal update, through articles, videos and other sources, all bundled together in a newsletter.
In this issue, we:
- inform you of the new tax transparency provisions for crypto assets.
- update you on changes to the EU Blacklist.
- share the NID rates for tax year 2026.
- explore a new personal income tax incentive for relocating to Cyprus.
- remind you of the relocation options for moving to Cyprus.
Tax Developments
International Tax Developments
Cyprus introduces tax transparency provisions for crypto assets
On 27 March, Cyprus published an amendment to the Law on Administrative Cooperation on Tax Matters, thus transposing the provisions of EU Directive2023/2226 amending Directive 2011/16/EU on administrative cooperation in the field of taxation (‘DAC8’) into local law.
In brief, DAC8 provides for automatic exchange of information on crypto-assets between EU countries, aiming to strengthen the overall legal framework on the automatic exchange of information (AEOI) by cover crypto-assets and enhancing cross-border cooperation between tax authorities. It introduces mandatory reporting and automatic exchange of information on crypto assets across EU Member States. It is based on the OECD Crypto-Asset Reporting Framework (“CARF”), creating alignment with emerging global standards.
The key new reporting entities are Crypto-Asset Service Providers (CASPs).
CASPs must apply due diligence and report detailed user and transaction data, including:
1. Identity of Reportable Persons
- For individuals: their name, address, date/place of birth, TIN, and Member State of residence.
- For entities: details of the entity itself and its Controlling Persons (Beneficial Owners).
2. Transactional Data
CASPs must report detailed financial metrics for each type of reportable crypto asset, categorized by:
i. Acquisitions and Disposals: Total gross amounts paid/received and the total number of units.
ii. Fair Market Value: The value of the transactions made against other crypto-assets or for retail payments.
iii. Transfers: Information on transfers to and from users that fall outside standard buy/sell transactions.
3.External Wallet Transfers
A specific requirement mandates reporting on transfers made to distributed ledger addresses (external wallets) that are not known to be associated with a regulated financial institution or another virtual asset service provider.
For more details click here.
Updated EU list of non-cooperative jurisdictions for tax purposes
On 17 February 2026, the European Council updated the EU list of non-cooperative jurisdictions for tax purposes (EU Blacklist). The list promotes global tax good governance by listing countries not meeting international tax commitments.
The list was updated by adding the Turks and Caicos Islands and Vietnam, while removing Fiji, Samoa, and Trinidad and Tobago, now compliant with international tax standards. The Turks and Caicos Islands have been added to this list due to concerns over the enforcement of economic substance requirements and Vietnam for issues in tax information exchange.
Following this update, the list includes ten jurisdictions: American Samoa, Anguilla, Guam, Palau, Panama, Russia, Turks and Caicos Islands, US Virgin Islands, Vanuatu, and Vietnam.
As a reminder, subject to conditions, Cyprus applies withholding taxes on dividends, interest and/or royalties paid to companies which are based in jurisdictions included the EU Blacklist.
Local Tax Developments
Cyprus reference rates for NID purposes
On 18 March 2026, the Cypriot Tax Department issued an announcement, listing the 10-year government bond yields as at 31 December 2025 for a number of countries
These yield rates can be used to determine the reference interest rate for claiming notional interest deduction (NID) as per Article 9B of the Income Tax Law (ITL) for tax year 2026.
As a reminder, Cyprus tax-resident companies (as well as foreign companies with permanent establishments in Cyprus) that employ new equity issued to produce taxable income, are entitled to claim a notional interest deduction (NID). The NID is deducted from the company’s taxable income for the relevant tax year for the period during which the company used the new equity in generating taxable income.
The NID equals to the new equity multiplied by the “reference rate”, as defined below and is capped to 80% of the taxable income generated from employing the new equity.
“Reference rate” means the 10-year government bond yield of the country in which the new equity is invested, as of 31 December of the year preceding the tax year, increased by 5%.
Introduction of a new income tax incentive for attracting skilled employees and professionals back to Cyprus
Cyprus has introduced a new personal income tax incentive under the “Minds in Cyprus” also known as “the Brain Gain” initiative, to encourage professionals/skilled employees who have built their careers abroad to return to Cyprus.
The new incentive, which was published in the Official Gazette on 6 March 2026, is codified under Article 8(21B) of the Cyprus Income Tax Law (Law 118(I)/2002). Eligible individuals may claim a 25% exemption on their remuneration from any employment in Cyprus, or on the profits from carrying on a business in Cyprus with maximum amount of the exemption the €25,000 per tax year, for up to 7 years.
The provisions of the new Article 8(21B) which are in effect as from 1 January 2025, apply to an individual who:
(i) he/she is a tax resident in Cyprus, except for the year in which he/she commences employment or carrying on a business in Cyprus (Note 1); and
(ii) he/she has started employment or carrying on a business in Cyprus as from 1 January 2025 until 2030; and
(iii) during the first 12 months following the date of commencement of his/her employment or the exercise of a business in Cyprus, had a remuneration from employment in Cyprus or profits from the exercise of a business in Cyprus, that exceed the €30,000; and
(iv) he/she was not a Cyprus tax resident during the 7 tax years preceding the year of commencement of employment or carrying of a business in Cyprus; and
(v) was a Cyprus tax resident in any year preceding the period of the 7 tax years as specified in paragraph (iv) above; and
(vi) meets at least one of the following conditions:
a. He/she holds a recognised university degree, as recognised by the Cyprus Council for the Recognition of Degrees in terms of equivalence, and was employed on a full-time basis outside Cyprus, by an employer, who was not tax resident in Cyprus, for a total period of at least 36 months, within the period of 84 months preceding the month in which he/she started to be employed or to carry on a business in Cyprus; or
b. He/she was employed on a full-time basis outside Cyprus by an employer who was not tax resident in Cyprus, for a period of 84 months preceding the month in which he/she began the employment or the carrying on of a business in Cyprus.
It is further provided that:
(i) the exemption is granted in the year in which the individual commence employment or carrying on of a business in Cyprus and during the following 6 tax years, provided that, his/her remuneration from the employment exercised in Cyprus or the profits from the carrying on of a business in Cyprus exceed the €30,000 during each tax year,
(ii) in case the exemption of Article 8(21B) is provided then, the exemption of Article 8(21A) shall not be provided,
(iii) the exemption shall be granted to the eligible individuals, once in their lifetime, for the years in which the provisions of this new Article apply.
Deloitte View
From a policy perspective, the introduction of the repatriation incentive under Article 8(21B) of the Cyprus Income Tax Law, represents a further step in Cyprus’ efforts to enhance its attractiveness as a destination for skilled professionals/employees.
By extending tax relief to individuals who have previously worked abroad, the measure aims to facilitate the repatriation of experienced professionals/employees and support the transfer of international expertise into the local economy.
The availability of the exemption for both employment remuneration and self-employed business profits may also broaden the potential beneficiary base, particularly among professionals who intend to establish independent practices or entrepreneurial ventures upon returning to Cyprus. In this context, the incentive may contribute to strengthening the domestic market and fostering innovation and economic growth.
Nevertheless, individuals considering relocation should carefully assess the eligibility criteria and the interaction of the new provision with the other available attractive incentives/exemptions under Article 8 of the Income Tax Law, such as the exemption of 50% on the remuneration from employment in Cyprus as per Article 8(23A) of the Income Tax Legislation.
Note 1:During the first year of employment or the carrying on of a business, the individual could either be a Cyprus tax resident or a non-Cyprus tax resident.
Director, Global Employer Services
Embrace new horizons: Relocating to Cyprus
Relocating is a multifaceted decision that extends beyond mere movement; it’s a strategic choice shaping future opportunities. Cyprus emerges as a prime location for non-EU citizens due to its favorable tax policies and enticing Mediterranean lifestyle. With expectations to join the Schengen Area in the near future, Cyprus is poised to offer even greater mobility and connectivity. Whether you are an entrepreneur seeking to expand, a retiree in pursuit of a serene environment, or a professional or family looking for a high-quality life, Cyprus offers a variety of welcoming pathways to suit your ambitions. Our publication explores the key relocation options, emphasising the unique advantages and pathways available in Cyprus.
For more details, read the full article here.
Senior Manager, Global Employer Services, Immigration
Archive
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