Cyprus Action Plan for attracting companies to operate or expand their activities in Cyprus
The Cyprus government published its Action Plan for recruiting firms to establish or extend their activities in Cyprus on October 15, 2021, in an effort to make the island a sustainable regional and European business and trade centre.
The new plan follows the European Commission's and the Recovery and Resilience Facility's recommendations, and its execution seeks to boost the economy while also redefining the country's development paradigm. The Action Plan's main points are simply summarized below:
1. Transformation of the existing Fast Track Business Activation Mechanism into a Business Facilitation Unit
The unit will serve as a point of contact for all companies of foreign interest operating in Cyprus or foreign companies desiring to do so, as well as for Cyprus companies engaged in specialized economic activities, such as:
Companies in the industries of biogenetics & biotechnology
The responsibilities of this unit will be:
The provision of services for the establishment of corporate entities. Which ultimately includes:
a. Name approval and subsequent company formation
b. Registration with the Social Insurance Registry and the Employers’ Registry
c. Registration with the VAT and Income Tax
Guidance on the formation and running of businesses in Cyprus..
Facilitation for the issuance of residence and employment permits in Cyprus.
2. Revised policy for the issuance of temporary residence and work permits to third-country nationals
Companies of foreign interest operating in Cyprus or foreign companies wishing to establish a presence in Cyprus
Cyprus shipping/maritime companies
Cyprus high-tech/innovation companies
Cyprus pharmaceutical companies or companies operating in the fields of biogenetics and biotechnology.
Employees with the requisite academic capabilities or at least two years of relevant experience can be paid a minimum gross monthly salary of €2,500.
Companies will be permitted to hire third-country nationals as support staff (with gross monthly pay of less than €2,500) as long as they do not account for more than 30% of total support staff..
The residence and work permit will be issued within one month after the application date and can last up to three years.
The maximum number of third-country nationals is 70% of the total number of employees in a 5-year period from the date of the inclusion of the company in the Business Facilitation Unit.
3. Right to employment for family members of third-country nationals who are part of the third country employment policy
Spouses of third-country nationals who have secured a residency and work visa in the Republic and earn a minimum gross monthly income of €2,500 (not applicable to support employees) will have immediate and free access to employment.
4. Simplification of the process for granting work permits
The Ministry of the Interior will revise the relevant Regulations of the Aliens and Migration Law to streamline the procedure and establish the conditions for granting work permits.
5. Digital nomad visa
A new type of residence permit will be introduced, for people who wish to live in Cyprus but work in companies operating abroad.
Beneficiaries: Third-country nationals who are self-employed or employees who work remotely using information and communication technologies, with employers/clients outside Cyprus.
Quota: A maximum initial limit of 100 applications
Right to stay in the Republic for up to one year, with the option to extend for another two.
They can be accompanied by family members, who will be issued a residence visa that will expire at the same time as their dependents'. During their stay in Cyprus, the dependent's spouse or partner (in the case of civil unions) and minor members of the dependent's family are not permitted to perform dependent labour or engage in any type of economic activity.
They are deemed Cyprus tax residents if they dwell in the Republic for one or more periods totalling more than 183 days in the same tax year
Prerequisites (among others):
There is a €3,500 monthly minimum threshold for money arriving from overseas (supported by wages, bank statements, etc. ), which is enhanced by 20% for the spouse and 15% for each minor.
Clean criminal record certificate from the country of residence.
6. Tax incentives
Expansion of the existing income tax exemption of 50% for taking up employment in Cyprus
a) The personal income tax exemption of 50% will be expanded to cover new Cyprus tax residents-employees with salaried income of €55,000.
b) Existing program participants should be able to prolong their exemption from ten to seventeen years. Individuals having an annual income of €55,000 to €100,000 over the next 17 years are eligible to apply.
Extension of the tax exemption for investment in innovative companies
Corporate investors may be eligible for a 50% tax break if they invest in certified innovative companies. (The scheme that was in force until 30 June 2021 applied only to individuals.)
Increased tax deductions for Research & Development (R&D) expenses
Increasing the tax deduction for R&D costs (e.g. by 20% ). R&D costs that are eligible will be deducted from taxable income at a rate of 120 % of the actual amount.
7. Application for Cypriot Citizenship
The period of eligibility for citizenship application will be shortened from seven to five years of residence and labour in the Republic.
Holders of certification for a very excellent understanding of the Greek language are eligible for a reduction to four years of residence and labour.
8. Promotional Plan
Promotion of the Action Plan abroad
Campaign for attracting qualified Cypriots working abroad
Targeted campaign to qualified workforce employed in countries with political instability.
With the exception of actions 6-7 above, which require legislative rules, the Action Plan will be executed on January 1, 2022. By the end of December, the appropriate legislation should be submitted to Parliament and passed in the first quarter of 2022.
*DISCLAIMER: This article and its publication are intended to provide a brief introduction and act as a general guide. This is provided for information purposes only and cannot be utilized as a substitute for professional advice. This document does not represent a legal opinion and one must not rely on it without receiving independent advice based on the particular facts of its own case. No responsibility is accepted by the author or the publishers for any loss suffered from acting or refraining from acting based on the contents of this publication.
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