NEW STRATEGY FOR ATTRACTING COMPANIES IN CYPRUS

The Minister of Finance Mr. Konstantinos Petridis presented on the 15^th of October 2021 the Action Strategy for attracting companies to activate or expand their activities in Cyprus.

In summary the incentives announced are in relation to residency and employment, taxation, simplification and digitization of procedures, as well as promoting the country as an attractive investment destination.

The different schemes will start entering into force from 1^st of January 2022.

Emphasis is placed on areas related to, inter alia, High Technology, Shipping, Innovation, Research and Development, Biogenetics and Biotechnology and any other companies that choose Cyprus as their place of business.

In more detail the actions are as follows:

1. Business Facilitation Unit

This is the evolution of the existing Fast Track Business Activation Unit for International Companies to the Business Facilitation Unit.

Responsibilities:

• Provision of Services for setting up businesses:
  • Company registration, name approval
  • Registration with the Social Insurance
  • Registration with the VAT and Income Tax authorities
• Guidance for the necessary licenses to operate in Cyprus
• Accelerate the issuance and renewal of residence and employment permits 

2. New Policy for Employment of Third Country High Skilled Nationals

Review, expansion, and simplification of the existing policy.

Eligible companies:

High Technology, Shipping, Innovation, Research and Development, Biogenetics and Biotechnology and any other companies that choose Cyprus as their place of business.

Employment Permits:

• Minimum gross monthly salary €2,500.
• Holding of a university diploma or degree or equivalent qualifications or certificate/verification of relevant experience in a corresponding employment position of at least 2 years.
• Presentation of an employment contract for a minimum of two years.

The duration of residence and employment permits will be for up to three years.

The issue of the residence and employment permits will be made within 1 month.

The maximum number of third-country nationals eligible for employment is set at 70% of all employees in a period of 5 years, from the date of joining the Business Facilitation Unit. In case the company did not employ the 30% Cypriot workers, the Business Facilitation Unit will review each case independently at the end of the 5^th year and decide accordingly.

The employment of third-country nationals as support staff is permitted provided that it does not exceed 30% of all staff. The third country nationals and the employer must enter into an employment contract duly ratified by the competent authority in Cyprus and to be in accordance with current legislation. The amount of the salary is determined based on the current legislation.

3. Family Reunification

Direct and free access to the Cyprus labour market with paid work, to spouses whose spouse has obtained a residence and work permit in Cyprus, and who receives a minimum gross monthly salary of €2,500. The family reunification does not apply to support staff.

4. Simplification and Faster Processing of Issue of Work Permits (CATEGORY E: Long-Term Resident Status)

This relates to persons who have been offered permanent employment in the Republic, which will not create undue local competition. Right to a pension through the Social Insurance Fund by intensifying the efforts to conclude Bilateral Agreements with third countries so that when a third country national has paid social security contributions in Cyprus, when he/she returns for permanent residence in his/her country to be entitled to transfer the contributions paid with the condition that with these contributions he/she did not acquire any right to old-age pension, disability, etc.

5. Introduction of DIGITAL NOMAD VISA (up to 100 individuals)

Beneficiaries:

Third-country nationals that are self-employed or employed working remotely with the use of information and communication technologies with employers and/or clients that are situated outside Cyprus.

Residence status:

• They have the right to stay in the country for up to one year, with the right to renew for another two years.
• They can be accompanied by their family members, who are granted, upon request, a residence permit that expires at the same time. During the stay in Cyprus, the spouse or partner (concerns persons who have entered into a cohabitation agreement), and the minor members are not allowed to work or to engage in any kind of economic activity in Cyprus.
• If they reside in the Republic for one or more periods that in total exceed 183 days within the same tax year, then they are considered tax residents of Cyprus, considering that they are not tax residents in any other Country.
• Evidence that the applicant has sufficient resources, at a level of fixed income, to cover expenses during his/her stay in the country, without burdening the national social welfare system. The amount of sufficient resources is set at €3,500 per month. The amount is increased by 20% for the spouse or cohabitant and by 15% for each child.

6. Tax Incentives

• Tax exemption of 50% to new residents-employees with annual remuneration exceeding €55,000.
• Existing employees with earnings of less than € 100K have the possibility to extend the benefit from 10 to 17 years. Potential beneficiaries are also individuals with annual remuneration between €55,000 and €100,000 for the remaining a period of 17 years.
• Possibility of extending the 50% tax exemption for investment in certified innovative companies by corporate investors.
• Possibility of an increased deduction on research and development costs (e.g. by 20%). Eligible research and development costs will be deducted from taxable income at 120% of actual.

7. Citizenship

Right to apply for naturalization:

• After 5 years of residence and work in the Republic, instead of 7 that is valid today.
• Further reduction to 4 years if they meet the criterion of holding a recognized certificate of very good knowledge of the Greek language.

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18 October 2021: New strategy for attracting companies in Cyprus.  
by: George Kallinicou