Introduction

On 15 October, the Cyprus’ Minister of Finance announced and presented an Action Plan targeting investments in Cyprus by foreign companies.

The key measures of the Action Plan are analysed below. The implementation of these measures will commence in the first quarter of 2022.

Business Facilitation Unit (BFU)

Transformation of the existing Fast Track Business Activation Mechanism into a Business Facilitation Unit for entities that operate or interest to operate in Cyprus.

The BFU will have the following responsibilities:

• Provision of services for the establishment of corporate entities:
  • Company registration and name approval
  • Registration to Social Insurance Registry and Employers’ Registry
  • Registration to VAT Registry and Income Tax
• Guidance for the establishment, licensing, and operation of companies in Cyprus
• Facilitation for the issuance of residence and employment permits in Cyprus

Revised Policy for third country nationals employed in companies of foreign interests operating in Cyprus as well as for Cyprus companies who add value to the Cyprus economy

Eligible Companies:

• Foreign companies/businesses operating in Cyprus or foreign companies/businesses wishing to establish presence in Cyprus which have a physical presence in Cyprus including establishment of independent offices that are separate from any private residence or other offices
• Cyprus shipping companies
• Cyprus high technology/innovation companies
• Cypriot pharmaceutical companies or companies operating in the fields of biogenetics and biotechnology

Main provisions:

• Employment in Cyprus for third country nationals with minimum acceptable gross monthly salary of €2.500, with the following conditions:
  • Possession of a university diploma or title or equivalent qualification or certification of relevant experience in a corresponding employment position for a duration of at least 2 years
  • Presentation of an employment contract of not less than two years
  • The maximum number of third county nationals employed, does not exceed the 70% of total employees for a period of 5 years from the date of inclusion in BFU
• For cases were the employment concerns support staff, with gross monthly salary less than €2.500, the employment of third country nationals must not exceed 30% of all support staff
• The employment permits will be issued within 1 month of the application and will last up to 3-year period
• Direct and free access to the labour market as paid employees for the spouses of those obtained a residence and work permit in the Republic, through BFU, and who receive a minimum gross monthly salary of €2.500 (not applicable for support staff)
• Simplification and speed-up of the process for granting work permits

Digital nomad visa

The beneficiaries are third country nationals who are self-employed or employees that work remotely using information and communication technologies, with employers/clients outside Cyprus and they wish to live in Cyprus. A maximum limit of 100 beneficiaries in the country will be initially exist.

Residency status:

• 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, to whom, upon request, a residence permit that expires at the same time as their dependent’s is granted. During their stay in Cyprus, the spouse or partner and the minor members of the dependent’s family are not allowed to provide dependent work or to engage in any kind of economic activity in the country
• If they live in the country for one or more periods that in total exceed 183 days within the same tax year, then they are considered Cyprus tax residents, meaning they are not tax residents in any other State

Prerequisites:

• Evidence (supported by salary, employment contracts, bank statements, etc.) that he has sufficient resources, at a fixed income level, to cover his living expenses during his stay in the country. The acceptable threshold of sufficient resources is set at €3.500 per month (increased by 20% for the spouse or partner and by 15% for any minor)
• Medical insurance
• Clean criminal record certificate from the country of residence

Tax incentives for employees

Expansion of the tax exemption applicable to employees in Cyprus (provided that they were non-residents in Cyprus prior to the start of their employment) for a period of 17 years.

There is an Income Tax exemption of 50% to new beneficiaries with income of more than €55.000 and existing beneficiaries of the scheme should be able to extend the benefit from 10 to 17 years, provided that their income is between their income is between €55.000 - €100.000 for the remaining of the 17 year period.

Tax incentives for companies

Consideration by the Ministry of Finance for the Extension of the tax exemption for 50% of investment in certified innovative companies and from corporate investors.

Increased tax deductions for Research & Development (R&D) expenses. Eligible R&D expenses may be deductible from taxable income in an amount equal to 120% of the actual.

Cypriot Citizenship

The right to submit an application for citizenship after 5 years of residence and work in the country or after 4 years if they meet the criterion of holding a recognized certificate of very good knowledge of the Greek language, instead of 7 years applicable today.