On October 15th 2021, the Council of Ministers decided to replace its current policy and set up a new Strategy for Attracting Businesses for Activities or/and Expansion of their Activities in Cyprus. The Republic of Cyprus adopted new incentives regarding the issuance of temporary residence and employment permits to employees of existing and new companies of foreign interests registered in the country.
As of 1 January 2022, the current “Fast Track Business Activation Mechanism” will evolve into the “Business Facilitation Unit (BFU)”. The Unit will be the single point of contact for foreign companies.
The purpose of the new unit will be the fast and efficient processing of requests received from foreign companies for the establishment of a company in Cyprus or the expansion of activities of existing companies.
The Council of Ministers approved the Amendment of the Policy on November 30th 2022 which then officially came into force on 12th December 2022. As part of the Foreign Interest Companies Registration procedure, foreign interest companies are required to present certificates proving an initial investment of at least €200,000 in the Republic.
According to the above scheme, eligible businesses must meet the following criteria:
a. Companies of which the majority of the shares are owned by third-country nationals.
It is noted that in the event 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 to or greater than the amount of €200,000.
b. Public companies registered on any recognised stock exchange.
c. Companies of international activities (formerly off-shore), which operated before the change of regime, whose data are held by the Central Bank.
d. Cypriot Shipping companies.
e. Cypriot High-tech/innovation companies
f. Cypriot Pharmaceutical companies or Cypriot companies active in the fields of biogenetics and biotechnology.
g. 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 that the conditions under which they were naturalized continue to be met.
All the above companies should be registered in accordance with the Laws of the Republic of Cyprus.
An enterprise qualifies as ‘High Technology Company’ if:
(a) it is already established and has a presence in the market
(b) it has a high level or experimental R&D intensity
(c) it developed product/s that fall into one of the following categories: products related to aviation and space industry, computers, electronic and telecommunication products, pharmaceuticals, biomedical, research and development equipment, electrical machinery, chemicals, non-electrical machinery.
Main incentives of relocating to Cyprus:
Upon submission of all the necessary documents to the Ministry of Energy, Commerce and Industry, the registration process for the establishment of companies must be completed within seven (7) working days.
- Path to European Market
- Revised immigration policy for non-EU tech professionals
- Business Facilitation Unit
- Attractive Corporate & Income Tax regime
- Favourable IP regime as low as 2.5%
- Access to double tax treaties
- Desirable lifestyle in a safe & clean environment
- Low cost of doing business
Employment and Residency criteria for the employment of third country highly-skilled personnel:
- minimum remuneration with a gross monthly salary of €2,500.
- university degree or diploma or equivalent qualification or confirmation of relevant experience in a corresponding employment position of at least 2 years duration is required.
- signed employment contract of not less than two years.
The licenses will be issued for a period of up to 3 years.
Non-highly skilled personnel
Employment of third country nationals support staff (with a gross monthly salary of less than €2500), is permitted provided that it does not exceed 30% of the total support staff and provided that there is an employment contract between the third country national and the employer which is duly validated by the competent authority in accordance with current legislation.
Maximum number of third-country nationals is set at 70% of all employees over a period of 5 years, from the date of joining the Business Facilitation Unit. Re-assessment after 5 years, on a case-by-case basis, if criterion of 30% Cypriot/European employees is not met.
Tax Benefits for Individuals
There is a great number of tax incentives for individuals in Cyprus. To start with personal taxation, the first €19.500 of taxable income is exempt from Taxation.
Tax benefits for relocated employees
There is a tax exemption of 50% of the Taxable Income derived from Employment in Cyprus subject to the fulfilment of the following conditions:
- The relocated employee must receive income from employment of at least €55.000 per annum;
- The exemption applies if the employee was not a Cyprus tax resident in the preceding 12 months before the commencement of employment;
- The exemption is applicable for a maximum of 17 years.
Tax Resident Individuals are taxed in Cyprus on their worldwide income.
An individual who spends at least 183 days in one or more periods in Cyprus within the same tax year is considered as a Tax Resident of Cyprus.
An individual who spends at least 60 days in one or more periods in Cyprus is considered as a Tax Resident of Cyprus subject to the fulfilment of all the following conditions:
- Does not spend more than 183 days in one or more periods within a tax year in another country and is not considered as a tax resident in another jurisdiction;
- Maintains an owned or rented property in Cyprus; and
- Is an employee or director of a Cypriot company.
Family reunification
Spouses whose family member has obtained a residence and work permit in Cyprus, and who receive a minimum gross monthly salary of 2,500 EUR (excluding support staff) are eligible for immediate and free access to the labour market.
Under the fast-track process, a work permit and a residence permit must be obtained within 4-6 weeks of the application’s submission date.
Based on bilateral agreements, TCNs may also transfer the social insurance contributions they paid in Cyprus when they return to their country of permanent residence.
Naturalisation
After 5 years of residence and work in Cyprus, third country nationals have the right to apply for naturalization. In another case, if the third country nationals are able to prove extensive knowledge of the Greek language, then they are eligible to apply for naturalization after 4 years.
