Fast Track Business Activation Mechanism ( Update 1)
On the 15th of October 2021, the Minister of Finance presented the government's new Action Plan for attracting companies to operate and/or expand their activities in Cyprus. The Action Plan includes the renaming of the "Fast Track Business Activation Mechanism" to "Business Facilitation Unit". The services and activities of the said Unit will remain the same, apart from an effort for digitalization to simplify all procedures. The proposed timeline for the previously mentioned actions is the first trimester of 2022.
As of September 2020, Cyprus has adopted a new concept for the establishment of companies of Foreign interest in the Republic called “Fast Track Business Activation Mechanism”. It aims to attract foreign companies to Cyprus and assist new and existing business entities of foreign interests, to establish a Cyprus company and presence in a fast and efficient manner (For more info in respect to the benefits of setting up a Cyprus company, please read our articles Cyprus – International Tax & Business Environment and Why Cyprus?). The Fast Track Business Activation Mechanism and the new Policy for obtaining residency and employment permits is a collaborative effort of all competent authorities, including the Ministry of Energy, Commerce and Industry, Ministry of Foreign Affairs, Ministry of Interior, Ministry of Labour, Welfare and Social Insurance, Ministry of Finance and Cyprus Investment Promotion Agency.
The Mechanism is operated by the Ministry of Energy, Commerce and Industry and includes the following services, divided in three main categories:
1. Establishment of a Cyprus Company
Provision of assistance to companies in order to obtain all necessary registrations and documentation for the establishment of establishment of a business from a single point of contact, including the following:
a. Name approval
b. Company registration
c. Registration with the Social Insurance Registry
d. Registration with the Employers’ Registry
e. Registration with the VAT Registry
f. Registration with the VAT Registry
g. Registration with the Income Tax
2. Licensing of Operations
Provision of information and guidance for obtaining all permits and licenses required in order to conduct business from your Cyprus registered company.
3. Employment and Residence
Facilitating the issuance of residence and employment permits in Cyprus for third country nationals.
Benefits of the Mechanism
Any foreign company eligible to enter the mechanism will benefit from the below:
1. All procedures for setting up the company will be completed in a period of 7 working days from the day the company enters the Mechanism.
2. Residence and Employment Permits issued in 4-6 weeks depending on the number of permits requested (provided the applicant is eligible and meets all criteria as per the current Cyprus Law – for further information on the Residence and Employment Permits, please read our article Residence and Employment Permit – Cyprus).
3. Employment of a greater number of third country nationals in specific professions and with specialized skills, for which a shortage of supply has been identified at national level, with the majority being related to digital skills.
As the Mechanism aims to contribute to the country’s economic growth, interested parties must meet specific qualitative and quantitative criteria:
1. Physical Presence
Companies must have or establish a physical presence in Cyprus including the establishment and operation of independent offices that are separate from any private residence
2. Existing Companies
Any existing Companies wishing to enter the Mechanism, should have a minimum turnover of €500.000 per year for at least 3 out of the last 5 years.
3. New Companies
Any new companies should submit a reliable and comprehensive 5-year business plan, illustrating growth potential.
Submission of Application and Evaluation Procedure
All applications should be submitted to the Ministry of Energy, Commerce and Industry along with the following documents:
1. A letter of expression of interest in establishing presence in Cyprus (this applies to companies not already operating in Cyprus), which should include the following information:
a. General Information
i. Company Name
ii. Year of Establishment
iii. Type of Legal Entity
iv. Representative Details (if applicable)
v. Company’s Contact Information
vi. Address of New Premises
b. Company Activities
i. Business History
iii. Facilities and Infrastructure
v. Organization and Management
vii. Customers – Distribution Network
c. Proposed Investment Information
i. Purpose and Objectives
ii. Place of Installation
iii. Capital Expenses
iv. Investment Implementation Schedule
v. Investment Financing
d. Financing of the Investment
i. Own Funds
ii. Borrowed Funds
e. Financial Forecast
i. Economic Forecast
iii. Return on Investment
2. Relevant Company Certificates and Documents, such as:
a. Certificate of Incorporation
b. Shareholders Certificate
c. Directors Certificate
d. Articles of the Association
e. Audited Financial Accounts for the 3 of the last 5 years (only applies to existing companies operating abroad and wishing to set up presence in Cyprus)
f. Business plan for the next 5 years (only applies to new businesses which do not have presence abroad and wish to set up presence in Cyprus)
Upon receipt of all the required documents, the application will be evaluated by an authorized 3-member Committee in three steps:
1. Due Diligence Checks
2. Evaluation of submitted documents
3. Interested party will be informed regarding entry or rejection to the Mechanism
*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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