On 15 October 2021, Cyprus approved the «Strategy for Attracting Businesses for Activities or/and Expansion of their Activities in Cyprus». With various key proposals, this action plan offers significant advantages for investors in Cyprus – and shows how Cyprus is becoming ever more business friendly.
The Strategy
1. The engine
The existing Fast-Track Business Activation Mechanism will become the Business Facilitation Unit (the «Unit»). This is more than just a new name. The Unit will have an enhanced role, essentially to make life easier for certain companies operating in Cyprus.
The Unit will act as a central point of contact for international companies operating or planning to operate in Cyprus, on condition that they have their own offices (which may not be in a private house). The Unit will also assist Cypriot companies operating in specific areas, including those operating in shipping, pharmaceuticals, high technology and innovation, biogenetics, and biotechnology. In particular, it will facilitate:
· Company formation in Cyprus
· Social Insurance and Employers registration
· VAT and Income Tax registration
· Permits and licencing
· Residence and employment permits for non-Cypriot staff
Joining this «one stop shop» should expedite and facilitate company formation and operation in Cyprus. The focus on high tech companies is a clear indication of the type of high quality, future-proof economy which Cyprus aims to develop.
2. Focus on people
The strategy incorporates a number of measures designed to facilitate the employment in Cyprus of third country nationals, in particular by those companies eligible for support by the Unit. This includes:
(i)
Employment licences for up to three years to be granted to third country nationals employed by companies which have joined the Unit. In essence, an eligible company may fill up to 70% of its highly skilled roles and 30% of its support roles with third-country nationals, defined as follows:
Highly skilled employees
Minimum gross monthly salary of EUR 2,500
University degree or a minimum of two years of corresponding employment
Employed on a contract of not less than two years duration
Support staff
Minimum gross monthly salary of EUR 2,500
(ii)
A «right of family reunification» means that the spouse of a highly skilled, third country employee, employed on a minimum gross monthly salary of EUR 2,500, will also be eligible to work immediately in Cyprus.
(iii)
Third-country nationals employed in Cyprus will have the right to apply for naturalization after residing and working for five years in Cyprus, rather than seven years as is currently the case. Those who can demonstrate a high competence in Greek may apply after only four years.
(iv)
The procedure for granting all work permits will be simplified and expedited.
(v)
Cyprus will strike bilateral agreements with third countries to make it easier for third country nationals who have accrued social security contributions through working in Cyprus to transfer these contributions back to their country of permanent residence.
3. Digital nomad visas
Like several other European countries, Cyprus has responded to the ever-growing popularity of remote working by offering a digital nomad visa. This visa will be available to third country nationals working remotely with employers/clients outside Cyprus for at least 12 months. Initially, this scheme will be limited to 100 beneficiaries, and is subject to conditions regarding income, insurance and character. The visa will offer the holder the right to stay in Cyprus for a year, with the right of renewal for a further two years. Spouses, civil partners and minor children of such visa holders will be allowed to stay in Cyprus, but not work.
4. Tax incentives
In summary:
50% income tax exemption for new non-domiciled employees earning at least EUR 55,000 per annum for a period of 10 years.
50% income tax exemption for existing non-domiciled employees earning at least EUR 100,000 per annum for an extended period of 17 years.
50% income tax exemption for existing non-domiciled employees earning between EUR 55,000 and EUR 100,000 per annum for a period of 10 years.
An extension of the 50% tax exemption for investments in an approved innovative company is to be considered.
R&D: up to 120% of eligible research and development expenditure may be deducted from taxable income.
5. A business-friendly environment
In addition to the measures referred to above, Cyprus intends to up-skill its domestic labour force, reform its company law, support innovative and high-tech companies, and market itself internationally as an attractive place to invest. All of this will only enhance the appeal of Cyprus as a business destination.
6. In summary
This wide-ranging strategy is intended to «offer high and sustainable added value to the economy» and «redefine the country’s development model», according to Cypriot President Nicos Anastasiades.
Implementation of the strategy is to commence in January 2022, with the necessary legislation expected to be approved in early 2022.
Cyprus already ranks as an attractive place for investment, offering political stability, a business-friendly environment, a high quality of life, and a convenient geographical location. The strategy offers tax incentives, but it is notable that Cyprus promotes itself as a business-friendly jurisdiction rather than simply a low tax option, and that the focus is on building a high-quality, sustainable economy rather than making a quick buck. The additional benefits of the strategy to investors are obvious and can only make Cyprus ever-more attractive to investors.
7. We can help
Leo Trust Cyprus Ltd has experience of all aspects of Cypriot company formation and management. We can also offer advice on matters such as investment and residency in Cyprus.
Of course, each client is different. To really understand how we can best help you, please speak to one of our client advisors. We will be delighted to put you in contact with Leo Trust Cyprus Ltd, and tailor a solution for your individual needs.
The full text of the strategy, an explanatory presentation and a Q&A document can be found here.
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This article is aimed at providing a general overview and summary of the issue. It is non-binding, and does not and should not be taken to constitute legal advice.
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