Government’s New Strategy for attracting Businesses

Government’s New Strategy for attracting Businesses

The Government of Cyprus through the Minister of Finance, in October 2021 has announced and introduced new policies that will implement and commence on January 2022 so as facilitate and attract foreign companies to operate and expand their business in the Republic of Cyprus.

1. BUSINESS FACILITATION UNIT

The existing fast track business activation mechanic will be enhanced with the unit to act as a central point of contact for all companies (foreign and Cypriot) which will be responsible for

1. the formation of companies, the name approval
2. the Registration in the Social Insurance Register, Registration in the Tax/VAT Register
3. the issuance of residence and employment permits in Cyprus

2. REVISED POLICY FOR THE EMPOYMENT OF THIRD COUNTRY NATIONALS

A Foreign Company may employee third country nationals provided that the below mentioned requirements are as below:

1. Foreign companies must operate in Cyprus and prove presence in Cyprus (physical presence)  in suitable premises separated by any private house
2. Minimum gross salary €2.500,00
3. University diploma or degree or equivalent qualification or confirmation of relevant experience in a corresponding job of at least 2 years duration
4. Employment contract of not less than two years duration
5. Work permits with up to three (3) years duration and will be issued in one month from the date of application
6. The foreign Companies may employee support staff, with gross monthly salary below €2.500, only if the employment of third country nationals does not exceed 30% of all support staff
7. The maximum number of third country nationals is set e 70% of all employees in a 5-year period from the date of joining the Business Facilitation Unit

REQUIREMENTS OF A “FOREIGN COMPANY”

• Third-country shareholders should own the majority of the company’s shares.

OR

• In cases where the percentage of foreign participation in the company’s share capital is equal to or less than 50% of the total share capital, in order for the company to be considered as eligible, then the foreign participation should represent an amount equal to or greater than the amount of € 200.000 as nominal capital.

OR

• Companies that fulfil the following criteria: Public companies registered in any recognized stock exchange

1. Former offshore companies that were operating in Cyprus by approval of the Cyprus Central Bank, before the change of their offshore status.
2. Cypriot shipping companies.
3. Cypriot companies of high technology / innovation.
4. Cypriot pharmaceutical companies or companies operating in the fields of biogenetics and biotechnology.
5. Persons who have acquired Cypriot citizenship by naturalization based on economic criteria, given that they will prove that the conditions under which they were naturalized are still met.

3. SPOUCES OF THIRD COUNTRY NATIONALS

Immediate and free access to labor market will be provided to the spouses of third country nationals who have been given a residence and work permit in Cyprus and who receive a minimum gross monthly salary of €2,500,. The said provision does not apply for the spouses of support staff and the right for reunification.

4. DIGITAL NOMAD VISAS

The digital nomad visa is a new type of residence permit for Third-country nationals that are self-employed or salaried employees, working remotely with employers / clients outside Cyprus using information and communication technologies and platforms.

The Residence Status of the above will be as below:

• Right to stay in Cyprus for up to one year, with the right to renew for another two years
• Accompanied by their family members who are granted, upon request, a residence permit that expires at the same time as that of the financial supporter. During the stay in Cyprus, the spouse or partner and the minor members of the family of the financial supporter are not allowed to engage in any form of economic activity in the country
• If they reside in Cyprus for one or more periods totaling more than 183 days within the same tax year, they are considered tax residents of Cyprus, provided that they are not tax residents in any other Country.

The digital nomad visa will be granted to the third country national provided the following documents / evidences (among others) are submitted:

1. A minimum stable and adequate income / funds (supported by salary, bank statements, etc.) up to €3,500 per month, increased by 20% if the beneficiary has a spouse and by 15% if the beneficiary has a minor;
2. Employment contract;
3. Medical insurance; and
4. Clean criminal record certificate from the country of residence

5. NATURALIZATION

Third Country Nationals will have the right to apply for naturalization:

• After 5 years of residence and work in the Republic, instead of 7 that were required before the Action Plan
• Further reduction to 4 years if the criterion of holding a recognized certificate of very good knowledge of the Greek language is met.

6. TAX INCENTIVES

1. Tax exemption of 50% to new non domicile employees with employment remuneration of €55,000 and above – period 10 years
2. Tax exemption of 50% for existing non domicile employees with employment remuneration of €100,000 and above – extended period 17 years
3. Tax exemption of 50% for existing non domicile employees with employment remuneration between €55,000 & 100,000 – period 10 years.

The Government and relevant authorities examine the possibility of extending the 50% tax exemption for investment in certified innovative companies to corporate investors.

An increased tax deduction (i.e. by 20%) will be applied on the expenses related to Research & Development (“R&D”). Particular expenses of R&D will be deducted from taxable income in an amount equal to 120% of the actual income.

7. SOCIAL INSURANCE

 Securing the right to a pension through the Social Insurance Fund by intensifying the efforts for concluding Bilateral Agreements with third countries by the Ministry of Labour and Social Insurance. When a third-country national who has paid social security contributions in Cyprus returns for permanent residence in his/her country, he/she will be able to transfer the contributions paid, on the condition that with these contributions he/she did not acquire any right to an old age pension, disability, etc.

We Can Help You Acquire temporary residence and work permit in the Republic of Cyprus.

Antonis K. Karas L.L.C offers a full range of services to non-European Citizens who are interested in obtaining a Permit in Cyprus.

Our law firm provides the following services regarding the work permit residence

• Advising on all legal matters of establishing a Company in Cyprus or investing in an existing Cyprus Company;
• Filing of all necessary documents for a Company formation at the Registrar of Companies;
• Filing of the application and documents to the Cypriot authorities on behalf of the applicant;
• Monitoring the progress of the application;
• Collect all documentation on behalf of the applicant.

We are at your disposal for any questions you may have, or any clarifications needed.