A new Action Plan for attracting Businesses and Professionals
On October 15, 2021, the Council of Ministers approved the revised Action Plan for Attracting Businesses and Professionals in Cyprus.
This announced Action Plan is a very important initiative towards attracting both international investments and talent. The existing investment policy has been radically reviewed, broadened, and simplified to include a series of actions and reforms in several areas of intervention, aiming to enhance Cyprus’ position as an international high-growth business center and redefine the Cyprus growth model.
The Ministry of Energy, Commerce, and Industry, following the approval of the Ministerial Council’s decision for the new strategy, will play a key role in this action. As of January 1, 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.
Highlights of the Strategy
- Foreign companies/undertakings operating in the Republic of Cyprus or foreign companies/undertakings intending to operate in the Republic of Cyprus, that operate independent offices in Cyprus, housed in appropriate independent offices, separate from residences or other offices;
- Cypriot shipping companies;
- Cypriot high-tech/ innovative companies;
- Cypriot pharmaceutical companies or companies active in the sectors of genetics and biotechnology.
Revised employment policy for the third-country nationals
The revised policy for the issuance of temporary residence and work permits to third-country nationals allows the Companies of International Interest to employ third-country nationals provided that the below-mentioned requirements are followed:
- University diploma or degree or equivalent qualification or confirmation of relevant experience in a corresponding job of at least two years duration;
- Employment contract of not less than two years duration.
Issuance of Residence and Employment Permits for Staff
- Up to three years;
- Minimum gross monthly salary of at least €2,500.
Duration for acquiring Residence and Employment Permits
- Within one month;
- A maximum number of third-country nationals is set at 70 percent of all employees over five years, from the date of joining the Business Facilitation Unit. Re-assessment after five years, on a case by case basis, if the criterion of 30 percent Cypriot employees is not met.
Right to employment for spouses of third-country nationals (Family reunification)
Immediate and free access to employment 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; thus, this provision is not applicable for the spouses of support staff.
a) An extension to the applicable period of the existing personal income tax exemption of 50% will be implemented to cover new Cyprus tax residents-employees with annual salaried income starting from €55,000. The current beneficiaries of the scheme will be able to extend their tax exemption from 10 to 17 years. In contrast, the potential beneficiaries, being individuals with annual income between €55,000 - €100,000, will be able to benefit from the exemption for a period of 17 years.
b) It is considered the possibility of expanding the tax exemption of 50% for investment in certified innovative companies to corporate investors.
c) An increased tax deduction (i.e. by 20%) will be applied to the expenses related to Research & Development (“R&D”). Particular costs ofR&D will be deducted from taxable income equal to 120% of the actual income.
Right to apply for Naturalisation
- After five years of residence and employment in the Republic of Cyprus, instead of seven according to the existing policy;
- Further reduction to four years if the criterion of holding a recognized certificate of very good knowledge of the Greek language is met.
Simplifying the process of granting work permits
The Aliens and Migration Law of Cyprus regulations, those relevant to the granting of work permits, will be amended by the Ministry of Interior of Cyprus to simplify the process and determine the criteria based on which work permits will be given.
Digital Nomad Visa (with a maximum initial limit of 100 applications)
The digital nomad visa is a new type of residence permit that will be introduced for people who wish to live in Cyprus but work in corporate entities operating abroad.
Third-country nationals who are self-employed or freelancers or employees who work remotely using information and communication technologies and platforms and having employers/clients outside Cyprus.
The residence status of the beneficiaries mentioned above will be as follows:
a) they will have the right to stay in Cyprus for up to one year, with the right to renew their permit for another two years;
b) they will be considered as Cyprus tax residents if they live in Cyprus for any periods that in total exceed 183 days within the same tax year;
c) their family members can accompany them, to whom, upon request, a residence permit is granted (expiring at the same time as the beneficiary's); and
d) the spouse/partner (being a person with which the beneficiary has entered into a civil union) and/or the minor members of the beneficiary's family in Cyprus are not allowed to provide dependent work or to engage in any kind of economic activity during their stay in Cyprus.
The digital nomad visa will be granted if the third-country national provides the relevant authorities with the following (among others) required documents/evidence:
A minimum threshold of 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;
Medical insurance; and
Clean criminal record certificate from the country of residence.
Services of the new Business Facilitation Unit (As of 1/1/2022)
The services that are provided by the Unit include:
1. Registration of companies in the register of foreign-interest companies
Assessment by the unit of whether companies wishing to employ third-country nationals fall within the criteria of foreign interest companies, as defined above. Subsequently, companies will be recorded under a special register that will notify the Civil Registry and Migration Department.
2. Provision of Services for the establishment of a company:
Assist companies in obtaining all necessary registrations to establish a new business entity at a single point. This includes the following:
- Company registration and name approval;
- Registration in the Social Insurance Register (employers’ register);
- Registration in the Tax/VAT Register;
- Accelerate the issuance and renewal of residence and employment permits.
3. Licensing facilitation for the establishment and operation of companies in Cyprus
- Guidance and provision of information on the necessary permits/licenses required for starting operations