Recently, several high value-added companies have chosen Cyprus as a country of activity, appreciating the comparative advantages of Cyprus and choosing it as a country of residence and employment. Having seen this, the government of the Republic of Cyprus introduced the Business Facilitation unit with intention to assist with the process of setting-up the companies in an efficient and easy way and has also implemented better provisions for highly skilled third-country national employees by simplifying the process of granting immigration and work permits.
This new Strategy for Attracting Investments in Cyprus is part of the Government’s ongoing efforts to attract foreign direct investment, increase jobs and adapt the Cypriot economy to the demands of the new era, the era of sustainable development in a highly internationally competitive environment.
The Shipping, High tech, Innovation, Research and Development, Biogenetics and Biotechnology are some of the sectors amongst others that are included in the strategy, without excluding any other companies that choose Cyprus as their place of business.
1) Business Facilitation Unit
The establishment of Business Facilitation Unit is the evolution of the existing Fast Track Activation Mechanism of International Companies. Now, there is the ability to complete all registrations for the establishment of business at the One Stop Shop Section of the Business Facilitation Unit.
The duties of this Unit shall be the following:
a) Provision of services for the establishment of businesses:
(i) Incorporation of company, approval of name;
(ii) Registration to the Social Insurance Registry;
(iii) Registration to the VAT Registry and to the Income Tax.
b) Provision of guidance to obtain the necessary licenses for specific activities in Cyprus;
c) Acceleration of issuance and renewal of the residence and employment permits.
A central point of business contact and prompt service are introduced. The procedures are digitalized and there is an online platform.
Eligibility Criteria for businesses:
– The majority of the company’s shares are owned by third- country nationals.
In case that the percentage of the foreign participation in the share capital of the company is equal to or below 50% of the total share capital, the company is eligible when this percentage of the share capital represents an amount equal or greater than the amount of EUR 200,000.
– Public companies registered on any recognised stock exchange.
– Companies of International activities (formely off-shore) which operated before the change of regime whose data are held by the Central Bank.
– Cypriot shipping companies.
– Cypriot High-Tech/innovation companies.
An enterprise qualifies as High Technology Company if:
a) It is already established and has a presence in the market, and
b) It has a high level or experimental R&D intensity and
c) It developed products that fall into one of the following categories: products related to aviation and space industry, computes, electronic and telecommunication products, pharmaceuticals, biomedical, research and development equipment, electrical machinery, chemicals, non-electrical machinery.
– Cypriot pharmaceutical companies or Cypriot active in the fields of biogenetics and biotechnology.
– Companies of whom the majority of the total share capital is owned by persons who have acquired Cypriot citizenship by naturalization based on economic criteria, provided that they prove the conditions under which they were naturalized continue to be met.
2) New policy for the employment of third country national
a) Employment permits
(i) Criteria:
– Minimum gross salary of EUR2,500;
– University diploma or title or equal qualification or confirmation of related experience on the respective position for two years;
– Submission of employment contract not less than two years.
(ii) Duration of residence and employment permits:
– Up to three years
(iii) Issuance of residence and employment permits
- Within one month
(iv) Number of people allowed to be employed
- The maximum number of the third country nationals who can be employed is defined to 70% of the employees’ total number within the period of 5 years, from the accession date to the Business Facilitation Unit. In case where the five years are passed and the employment of Cypriot employees up to 30% was not feasible, then will be re-examined on a case-by-case basis.
b) Employment of support staff
(i) The employment of third country nationals is allowed, provided that it is not above of the 30% of the total support staff and provided that the third country national and the employer have signed an employment contract duly stamped by the competent authority according to the relevant legislation.
(ii) Duration of the residence and employment permits:
– Up to 3 years
3) Family reunification for third country nationals included in the policy of employment as personnel of third countries.
Free and direct access to the labor market to paid employment, to spouses, if the sponsor has residence and employment permit in the Republic of Cyprus, and their monthly gross salary is minimum EUR2,500 (except support staff).
4) Simplification and acceleration of the process for granting employment permits (Category E- Persons who have been offered permanent employment in the Republic, which will not create undue local competition – long term residence permit).
5) Social insurances
To ensure the right of pension through the Social Insurance Fund, the Government intensifying the endeavors for the execution of Bilateral Contracts with third countries which shall be determined by the Ministry of Labour, Welfare and Social Insurance in order for the third country nationals who have paid social insurance contributions in Cyprus, to be able to transfer these contributions to the country of his permanent residence, provided that these contributions would not enable him to obtain any retirement pension or incapacity pension etc.
6) Introduction – Digital Nomad Visa (maximum threshold of 100 beneficiaries)
Issuance of Digital Nomad Visa
a) Beneficiaries:
Third country nationals self-employed/freelancers or employees who are employed by distance through use of technologies, information systems and communication with employers/clients out of Cyprus.
b) Residence status:
- Right to stay in the country up to one year, with renewal right for two more years.
- They can be accompanied by their family members, whom, following an application can obtain a residence permit which will be expired simultaneously with the one of the sponsor.
- If they reside in the Republic of Cyprus for one or more periods which in total are not over of 183 days within the same tax year, then shall be considered as Cyprus tax residents, provided that, they are not tax residents in any other Member State.
c) Necessary conditions (inter alia):
- Evidence that he has adequate amount as standard income, for the cover of the living expenses during his stay in the country, without burden the national system of social welfare.
- Adequate amount means the amount of EUR3,500 on monthly basis and it is proven by:
- the employment contract or a project or the confirmation of employment relationship in case of a dependent employment, services or project;
- bank account. If the adequate amount are payable by paid services of dependent employment, services or project, the abovementioned minimum amount is referred to the net income following the payment of the required taxes in the country provided the employment.
The abovementioned amount is increased by 20% for the spouse or the cohabitant and by 15% for each child.
- Healthcare coverage (GESY)
- Clean criminal record from the country of residence
7. Tax Incentives
– Tax exemption of 50% to new residents-employees who are getting paid by their employment in the amount of €55.000, for 10 years.
– The existing employees with income more than €100k can extend the benefit of tax exemption from 10 to 17 years.
– The existing employees with income between €55.000 and €100k can be benefited for tax exemption for the period of 17 years.
a) Extension of tax exemption for investments to innovation businesses.
– Exploring the possibility of the extension of tax exemption of 50% for investment to certified innovation businesses and by corporate investors.
b) Increased tax discount for expenses in research and development.
– Granting an increased discount for expenses concerning research and development. Chosen expenses in research and development shall deduct of the taxable income to the amount equal to 120% of the real amount.
8. Citizenship
Right of submission of application for citizenship:
- After five years of residence and employment in the Republic of Cyprus, instead of 7 years;
- Further reduction of 4 years if the applicant meets the criteria of holding a recognized certificate of very good knowledge of Greek language.
The content of this memo is intended to provide a general guide to the subject matter. Specialist advice should be sought on your specific circumstances. For further information, please contact Theo Antoniou: theo.antoniou@ctalaw.net or Christiana Antoniou: christiana.antoniou@ctalaw.net
