New Action Plan For Attracting Foreign Companies to Cyprus
In October 2021, the Cyprus government presented its Action Plan 2022 to attract companies to operate or expand their activities on the island. Cyprus aims to be recognized by foreign entrepreneurs as a sustainable business and trade center within Europe and the broader region.
This new strategy is in line with the guidelines of the European Commission and the Recovery and Resilience Facility, creating added value to the economy. It also aims to redefine Cyprus' development model for future generations as economic stability and social progress!
In the following, we have briefly summarized the key points for you. 💪
The Fast Track Business Activation Mechanism will transform into a Business Facilitation Unit (BFU).
The Business Facilitation Unit is responsible for providing services required to establish corporate entities. It oversees new companies' name approval, company registration, registration of social insurance, VAT, and the Tax Authority of the Republic. They are also in charge of guidance related to setting up your business and issuing permits or licenses.
The new agency will also serve Cypriot companies that fall into specific industry categories:
- high technology/innovation,
- and companies active in the field of biogenetics and biotechnology.
The Business Facilitation Unit's responsibilities in a nutshell:
- Support for the incorporation and operation of companies in Cyprus
- Services for the incorporation of companies in Cyprus
- Facilitation of the issuance of residence and work permits for Cyprus
Revised policy for issuance of temporary residence and work permits for third-country nationals
The Cypriot government has revised the policy on employing highly qualified personnel from third countries and those who add value to domestic companies.
Eligible companies fall within the administration of the Business Facilitation Unit:
- Foreign companies operating in Cyprus or wishing to establish a presence in Cyprus,
- Cyprus shipping companies
- Cyprus high-tech/innovation companies,
- Cyprus pharmaceutical companies,
- companies active in the field of biogenetics and biotechnology
In order to qualify, the following conditions must be met:
- At least €2.500 gross monthly salary for employees with required skills or at least two years relevant experience.
- The maximum quota of third-country nationals may not exceed 70% of the total number of employees in a period of 5 years from the date of admission of the company to the Business Facilitation Unit.
- Companies can hire third-country nationals as support staff with a gross monthly salary of less than €2,500, provided their share is less than 30% of the entire support staff.
- The residence and work permit duration can be up to three years and will be issued within one month from the date of application.
Right to work for spouses of third-country nationals who have obtained a residence and work permit in Cyprus
Spouses of third-country nationals who have obtained a residence and work permit in the Republic and receive a minimum gross monthly salary of €2,500 will now enjoy free access to employment. This regulation does not apply to spouses of support staff.
Simplification of the procedure for issuing work permits
The Ministry of Interior has announced that they are amending their Aliens and Migration Law regulations, which should make life much easier and faster when applying for work permissions as a third-country national.
Visa for Digital Nomads 🏖
Cyprus will be launching a new residence permit for digital nomads with an initial maximum number of 100 beneficiaries! The new Digital Nomad Visa will be introduced for people who wish to live in Cyprus but work in companies operating abroad.
Who can apply for Cyprus' new digital nomad visa?
The new digital nomad visa is for third-country nationals who are self-employed or employees who work remotely with employers or clients outside of Cyprus. Other known requirements to meet include:
- The minimum amount of funds originating from abroad (evidenced by salary slips, bank statements, etc.) is set at € 3,500 per month, increased by 20% for the spouse and 15% for minors.
- Medical Insurance
- Clean criminal record certificate from the country of residence
What does the new Cyprus Digital Nomad Visa offer?
- It allows you to stay in Cyprus for up to one year, with the right to extend for another two years.
- Holders of the Digital Nomad visa may be accompanied by their family members who, upon application, will be issued a residence permit that expires at the same time as the residence permit of the main applicant.
- During their stay in Cyprus, the family members cannot engage in paid employment or economic activity.
- If they spend more than 183 days in Cyprus within the same tax year, they are considered tax residents of Cyprus.
Various new tax incentives
Extension of the existing 50% income tax exemption for taking up employment in Cyprus
The Cyprus government announced that it wants to expand the personal income tax exemption by 50% to cover new Cyprus tax residents-employees with salaried income of €55,000 or more.
Existing beneficiaries of the scheme should extend the exemption period from 10 to 17 years and benefit from the lower threshold for the remaining period.
Extension of the tax exemption for investment in innovative companies
The Cypriot government is considering extending the tax exemption for investment in innovative companies. The current 50% exclusion would be extended to corporate investors to entice more foreign businesses into local markets and boost economic growth overall.
20% increased tax deductions for R&D expenses
The proposal would allow businesses to deduct r Research & Development expenses from their taxable income equal to 120%.
Cypriot Citizenship Applications
The Cyprus government also plans to adjust its citizenship program. The period for applying for Cypriot citizenship is reduced from seven years of residence and work in the Republic to five years. A further reduction to 4 years applies to holders of a certificate of very good knowledge of the Greek language.
What is the timeline for the implementation of the Cyprus Government Action Plan?
The new action plan will be implemented from January 1, 2022. However, the proposals for the tax incentives and Cypriot citizenship application require legislation that must pass through Parliament by the end of December and take effect early next year (the first quarter).
Source: Strategy for attracting Businesses and Talent PDF