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Cyprus is a highly attractive jurisdiction to set business and create substantial presence.
CYPRUS - WORKING RESIDENCE PERMIT
In general, as in most countries, Cyprus issues residence and employment permits on a temporary basis and for specified work. Foreign nationals (non-Eu citizens) can apply and be granted a general employment work permit for a duration of 4 years with the ability to renew if the Civil Registry is satisfied that such position could not have been filled by a Cypriot or an EU citizen. However, the Republic of Cyprus as an initiative to encourage international businesses to set up their headquarters on the island, provides for special residence and work permits for non-EU staff through the Business Facilitation Unit (BFU), that have no restrictions in regards to the duration of permits.
Which companies are eligible to apply to the BFU?
1. Foreign Interest Companies
· At least 50% of the company’s capital is owned by third country nationals or in cases where third country nationals own less than 50% of the capital, their capital ownership shall represent an amount of at least €200.000.
2. Public companies registered on any recognised stock exchange
3. Companies of international activities (offshore) which were trading prior to the change of regime and whose data are held by the Central Bank
4. Cyprus shipping companies
5. Cyprus high-tech/innovation companies
· A company is considered a “High-Tech” company if it meets the following criteria:
o Already established and has a presence in the market
o Has a high level or experimental research & development intensity
o Develops products in any of the categories of aviation and space industry, computers, electronic and telecommunication, pharmaceuticals, biomedical, research and development, electrical machinery, chemicals or non-electrical machinery
An eligible company which fulfils the above conditions should apply to the Ministry of Interior, Civil Registration and Migration Department to be registered as a Company of Foreign Interest. The following documents at a minimum will be requested:
Original Certificate of Incorporation by the Registrar of Companies.
Original Certificate of Registered Office by the Registrar of Companies.
Original Certificate of Directors by the Registrar of Companies.
Original Certificate of Shareholders by the Registrar of Companies, proving that the percentage of foreign participation in the company's share capital is over 50% of the total share capital*. In the case where companies are the shareholders, the whole chain of ownership up to the final owners (natural persons who are the ultimate beneficial owners) should be declared and documented. In case where the percentage of foreign participation in the company's share capital is equal to or less than 50% of the total share capital, in order for the company to be considered as suitable, the foreign participation should represent an amount equal to or greater than the amount of €200.000.
Directors’ Affidavit on the company's ownership
Ultimate Beneficial Owners’ valid passport(s)
Original Company Memorandum.
Description of the company’s principal activities.
Completed Analytical Statement of Company of Foreign Interests’ Personnel
Title of ownership or rent agreement. If the title of ownership has not been obtained yet, the applicant must submit the contract of sale duly stamped by the Stamps Commissioner and the Department of Lands & Surveys and proof of payments.
Audited Company Accounts (for companies already operating in Cyprus).
Tax Clearance Certificate for the company (for companies already operating in Cyprus).
Proof of Levy Payment for the Registrar of Companies (for companies already operating in Cyprus).
The establishment/operation of independent offices in Cyprus, in suitable premises, separate from any private housing or other office, except in the case of business co-habitation.
Foreign Nationals Staff
Approved companies by the BFU may employ third country nationals in the following positions:
• Key personnel
• Support staff
Key personnel
Any third-country national can be employed as “key personnel” considering the following conditions are met:
· They are highly-skilled individuals;
· They have a minimum gross monthly salary of €2,500;
· They have a university diploma or degree or equivalent qualification or credentials or relevant experience of at least 2 years.;
· They have an employment contract of not less than two years and up to 3 years
Support Staff
This category includes all third country nationals not included in the aforementioned category. In this case the Department of Labour expects that positions in this category should be filled by Cypriot or other EU citizens. In instances where no qualified Cypriot or other EU citizen can fill such positions then the company may elect to employ third country nationals in posts in this category at a rate of 30% of the total staff, by first securing positive recommendation of the Department of Labour.
Employees in this category, must be paid based on the current Cyprus legislation, a minimum of €870,00 for the first 6 months and €924,00 after the first 6 months. As of January 2023, a new decree will be implemented and the monthly minimum wage is set to €885,00 and after June 2023 it will rise to €940,00.
Application for a Work and Residence Permit
An eligible individual which fulfils the above conditions should apply to BFU for an entry permit, registration and acquisition of a temporary residence and employment permit. The following documents at a minimum will be requested:
• Copy of valid passport or other travel document with validity of at least two (2) years from the date of the submission of the application.
• Copy of the passport’s or other travel document’s page showing the latest arrival in the Republic and visa (if applicable)
• List of Company´s third country personnel per category (instances which this is not required)
• Brief Curriculum Vitae (CV) (including copies of academic qualifications) + Diplomas
• Original blood analysis results showing that the third country national does not bear/suffer from HIV, syphilis, hepatitis B and C and a chest x-rays for tuberculosis (TB) from a Government Hospital of the Republic or duly certified by a Government Doctor of the Republic
• Original contract of employment dully signed and two (2) copies dully stamped
• Title deed or rental agreement of a house/apartment dully certified by the relevant president of the community (mukhtar)
• Valid Certificate of Health Insurance for medical care that covers inpatient and outpatient care and transportation of corpse (Plan A)
• Employer´s liability insurance with an automatic renewal
• Original Certificate of Criminal Record from the country of origin (if the applicant resides in a country other than the country of origin, the certificate should be issued from the country of residence)
• Receipt of payment of the annual company fee to the Registrar of Companies (instances which this is not required)
Payroll – Employer’s and Employee’s Liabilities:
Each employer needs to cover the following expenses based on each employee’s remuneration on top of the monthly gross salary of the employee. The employee’s liabilities are automatically deducted from his gross salary by the employer.
Total percentage based on gross salary
14.90% Employer's Contribution
10.95% Employee's Contribution
Income Tax Exemptions
On the 15th of July 2022, the Cyprus House of Representatives voted in favour of a new bill in respect to the income tax exemptions for income deriving from employment:
50% tax exemption on remuneration for individuals who:
- Were firstly employed in Cyprus after the 1st of January 2022
- Have a salary of at least EURO 55.000 per year
- Were not residents of Cyprus for a period of at least 10 consecutive tax years immediately prior to the commencement of their employment in Cyprus
The period of exemption is for 17 tax years from the tax year of commencement of first employment in Cyprus.
20% tax exemption on remuneration for individuals who:
- Were firstly employed in Cyprus after the 1st of January 2022
- Were not residents of Cyprus for a period of at least 3 consecutive tax years and were employed outside of Cyprus by a non-resident employer
The period of exemption is for 7 tax years starting from the year following the year of commencement of employment.
STEP A : AT BUSINESS SET-UP STAGE
Planning
Assist in selecting the most appropriate corporate structure, depending on the business needs
Advise on the most suitable entity vehicle
Advise on the application of advantageous tax & legal regimes of the local legislation
Advise on financing options & cost forecast for the business operations
Support services for set-up requirements
Provision of fiduciary services
Forming and Registering the Company
Assist with the formation of an appropriate corporate entity / trust / fund
Assist with the opening of bank accounts with local banks
Registration & Ensure compliance of requirements for Tax, VAT etc.
Assistance and registration of entity with local authorities where necessary
Office premises and infrastructure
Finding the most appropriate business location, office space
Assist in drafting purchase/lease agreement for the office
Advice on issues regarding security, infrastructure, internal controls and statutory requirements including operational licenses.
People
Assist with interviewing suitable staff and local directors along with the remuneration structure
Assist in drafting employment contracts and registering the employees with local authorities
Assist with work permits for overseas staff and relocation of the family
STEP B : AT THE OPERATIONAL STAGE
Regulatory Compliance
Support & Management of bank accounts and banking issues in general
Ensure compliance with local authorities (TAX/VAT/REGISTRAR OF COMPANIES/ SOCIAL INSURANCE) & other reporting requirements
Assistance with filling requirements of local authorities
Fund administration services
Accounting services (outsource or co-source)
Advisory and Fiduciary
Asset & liquidity management services
Drafting of corporate documents (preparation of minutes, register books, share certificates) fully compliant with local legal requirements. Assistance in holding board meetings and annual general meetings
Drafting of legal documents and review of agreements. Provision of Power of Attorneys & other legal advise
Identification of new investment opportunities based on the business industry and needs.
Reporting
Accounting services & maintaining of proper accounting records
Preparation of financial statements (out-source) and/or management accounts in line with IFRS
Assistance & Advice on financial obligation and necessary reporting.
Human Resources and Personnel
Payroll services
Assistance of personnel with their taxable income requirements
Ensure compliance with GDPR regulations and advice on employment law issues
*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.
We are a team of experienced professionals, all sharing a unique drive for learning and development through teamwork. The Group utilizes its various core activities to implement customized solutions for its clients. Our collective experience spans the areas of Global Corporate & Fiduciary Services, Assurance & Advisory Services, Fund Administration, Tax Advisory, Corporate Governance, Financial Services, Private Wealth Services and Compliance.
Start a conversation with us today to find out how you can benefit from a relationship with Flexi Group.
Please get in contact with our Head of Business Development:
Mrs Daniella May / Head of Business Development
Tel.: + 357 7000 2 5555 / + 357 22 87 57 55
We also organize calls using Skype. Our flexi Skype ID is web@flexi-group.net