The Ministry of Finance recently announced the new Strategy after considering the best practices from other European countries and which aspires to establish Cyprus as a Sustainable Business and Commercial Center of the wider region and Europe.
Commencing in the first quarter of 2022, new policies will be implemented facilitating as per below:
1. Transformation and Upgrading of the existing Fast Track Business Activation Mechanism into a Business Facilitation Unit.
The existing Fast Track Business Activation Mechanism, which has been active for a year on the basis of a Decision of the Council of Ministers, will have an upgrade as it will act as the central point of contact for all companies of international interests that either operate in Cyprus or wish to operate as well as for Cypriot companies in specific sectors of economic activity.
The responsibilities of this unit will be:
- The provision of services for the establishment of corporate entities:
- Company registration and name approval
- Registration with the Social Insurance Registry and the Employers’ Registry
- Registration with the VAT and Income Tax
- Guidance for the establishment and operation of companies in Cyprus
- Facilitation for the issuance of residence and employment permits in Cyprus.
2. Revision and expansion of the Policy in relation to Employment permits for third countries employees by international companies.
Eligible enterprises are:
- Businesses/companies of foreign interests operating in the Republic of Cyprus or enterprises/companies of foreign interests that intend to operate in the Republic of Cyprus and that operate independent offices in Cyprus, which are housed in appropriate premises, separate from any private residence or other office
- Cyprus Shipping Companies
- Cyprus high-tech/innovation companies, Cyprus pharmaceutical companies or Cyprus companies active in the fields of biogenetics and biotechnology.
REQUIREMENTS
i. Employment of Third Country Nationals with high skills, provided that:
– a minimum gross monthly salary of €2500 will be paid
– they will hold a university degree or title or an equivalent qualification or certificates of relevant experience in a relevant employment position of 2 years.
– they will present a contract of employment of not less than two years.
ii. The maximum allowed number of third-country nationals who can be employed is set at 70% of all employees over a period of 5 years, from the date of accession to the Rapid Authorization Mechanism. In case the 5 years have elapsed, and it is not possible to employ 30% of Cypriot employees, it will be reviewed on a case-by-case basis.
iii. Employment of support staff (with a gross monthly salary of less than €2500), allowed
iv. The employment of third-country nationals provided that it does not exceed 30% of the total support staff and provided that the third-country national and the employer have concluded a contract of employment duly certified by the competent authority with each other, in accordance with the applicable legislation.
v. Direct and free access to the labor market with paid employment, to spouses whose supporters have obtained a residence and work permit in the Republic, through the Mechanism, and who receive a minimum gross monthly salary of 2500 (not for support staff).
vi. The duration of the residence and work permit can be up to three years and will be issued within one month from the application date
Note : In order to obtain the relevant employment permits for employees from third countries, companies/businesses must submit certificates of registration in the Registrar of Companies register and the Tax Department.
3. The duration of the residence and work permit can be up to three years and will be issued within one month from the application date.
Spouses of third country nationals who have obtained a residence and work permit in the Republic, and who receive a minimum gross monthly salary of EUR 2,500 (not applicable for support staff) will have immediate and free access to employment.
4. Simplification of the process for granting work permits
The Ministry of Interior will amend the relevant Regulations of the Aliens and Migration Law, to simplify the process and determine the criteria based on which work permits will be granted. (category E)
5. Digital nomad visa
Beneficiaries are Third-country nationals self-employed/or employees who work remotely using information and communication technologies with employers/ clients outside Cyprus for a period of 12 months with a maximum initial Limit of 100 applicants.
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 may be accompanied by the members of their families, who are granted, at their request, a residence permit. During the stay in Cyprus, the spouse or partner (for persons who have entered into a civil partnership) and the children, members of the dependent person’s family are not allowed to provide dependent work or tο carry out any kind of economic activity in the country.
- If they live in the Republic of Cyprus for one or more periods that in total exceed 183 days within the same tax year, then they are considered tax residents of Cyprus provided that they are not tax residents in any other State.
Note: The residence permit is issued to the person concerned, when provided statutory declaration regarding the employment contract, that he has a stable income, a bank account, a clear criminal record and medical insurance.
Prerequisites
- There is a minimum threshold of funds coming from abroad (supported by salary, bank statements, etc.) set to EUR 3,500 per month, increased by 20% for the spouse and by 15% for any minor
- Medical insurance
- Clean criminal record certificate from the country of residence.
6. Tax Incentives / motivation
There is the consideration by the Government and Tax Authorities of the possibility of extending the 50% tax exemption for investment in certified innovative enterprises and by corporate investors. The regime in force until the end of June 2021 allowed the tax exemption only to physical persons.
Further to the above consideration, the following were decided:
- Extension of the existing tax exemption to cover new residents-employees with remuneration from employment of €55,000 or more with a tax exemption of 50%.
- Existing employees have the option to extend the benefit from 10 to 17 years.
- Potential beneficiaries of the benefit are people with incomes (€55K-€100K) for the remaining period of 17 years. At the same time, the abolition of the existing tax provision of exemption of 20% from employment activity in the Republic of Cyprus or €8,550 (whichever is less) will be promoted, since incomes above €55K will receive an income tax exemption of 50%.
- Granting of an increased discount for research and development costs (e.g. by 20%). Eligible costs on research and development will be deducted from taxable income to an amount equal to 120% of the actual
7. Application for Citizenship.
One can Apply for the Cyprus Citizen ship after 5 years of residence and work in the Republic of Cyprus.
Further reduction to 4 years if residents have certificate of very good knowledge of the Greek language
8. Social Insurance
Ensuring the transfer of social insurance contributions, through intensification of efforts to conclude bilateral Agreements with third countries to be defined by the Ministry of Labour, Welfare and Social Insurance so that when a third-country employee has paid social insurance contributions in Cyprus, when returns for permanent residence in his country to be entitled to transfer the contributions he has paid, provided that with these contributions he has not acquired any right to a pension fund, etc.
9. Plan for Promotion
- Promotion of the Action Plan abroad
- Campaign for attracting qualified Cypriots working abroad
- Targeted campaign to qualified workforce employed in countries with political instability.
TIME FRAME FOR IMPLEMENTATION
The Action Plan as stated above with the relevant steps will be implemented as from the 1 January 2022 with the exception of actions regarding the Citizenship and the tax Incentives for which legislative regulations are required.
The aim is for the relevant legislation to be submitted to Parliament by the end of December and to be approved in the first quarter of 2022.
ADDITIONAL ACTIONS TO THE PLAN BEING CONSIDERED
- Regarding the upgrading of infrastructure for information and communication technologies and broadband it is noted that this upgrading is essential for attracting technology-intensive international companies that use big data and “cloud” services and rely on high and reliable internet speeds.
- Completion of the Judicial Courts Reform
- Modernization and reform of the Cyprus Company Law
- Vote of the proposed legislation to facilitate strategic investments
- Creating an online platform for start-ups, innovative and high-tech companies
- Review a framework for spin offs in order to make it more attractive
- Implementation by the market in cooperation with the HRDA (Human Resources Development Authority) considering the ever-increasing trend for digitalization and automation.
- In cooperation with the market, to ensure the even greater employability of higher education graduates in order to increase their efficiency and earnings
Contact us:
If you would like more information about how GCPLAW can help you, feel free to contact:
Emilios Koulountis, Senior Lawyer, emilios@gcplaw.com.cy
