On 15 October 2021 the Cyprus government presented its Action Plan for attracting companies seeking to operate or expand their activities in Cyprus. The incentives given include immigration and employment, taxation, simplification and digitization of procedures, as well as promoting the country as an attractive investment destination. The Plan enters into force on January 1, 2022.
The key points of the Action Plan are summarised below:
1. Transformation of the existing Fast-Track Business Activation Mechanism into a Business Facilitation Unit
The Unit will be established as the point of contact for all companies of international interest, either operating or having the intention to operate in Cyprus:
The responsibilities of this unit will be:
• The provision of services for company incorporation:
– Company registration and name approval
– Registration with the Social Insurance Registry and the Employers’ Registry
– Registration with the VAT and Income Tax authorities
• Guidance for the relevant permits for activation in Cyprus
• Acceleration in 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 interests operating in the Republic of Cyprus or foreign companies wishing to establish presence in Cyprus which have a physical presence in Cyprus and operating independent offices in Cyprus, which are housed in suitable spaces, separate from any private home or other office
• Cyprus shipping companies,
• Cyprus high-tech/innovation companies,
• Cyprus pharmaceutical companies or companies operating in the fields of biogenetics and biotechnology.
Residence Permit Criteria:
1. Minimum gross salary Euro 2.500
2. Possession of a university diploma or degree or equivalent qualification or certificate relevant experience in a corresponding employment position of a 2-year duration
Duration of Residence and Working Permit:
Up to 3 years
Issue of Residence and Working Permits:
Immediately within a month
Permitted employment number:
The maximum number of third-country nationals eligible for employment is defined at 70% of the of all employees in a period of 5 years, from the date of entry into the Business Facilitation Unit.
Employment of support staff:
Companies will be able to employ third country nationals as support staff (with gross monthly salary below €2,500) provided that the employment of third-country nationals does not exceed 30% of all support staff
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 obtained a residence and work permit in the Republic, and who receive a minimum gross monthly salary of €2,500 (except for the support staff) will have free and direct access to the labour market with salaried employment.
4. Simplification of the process for granting work permits
The Ministry of Interior will amend the relevant Regulations of the Aliens and Migration Law, to simplify the process and determine the criteria based on which work permits will be granted.
5. Introduction of Digital nomad visa (with a maximum initial limit of 100 beneficiaries)
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.
• Right to stay in the country for up to one year, with the right to renew for another two years
• 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 Republic 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 (among others):
• Evidence that he/she has sufficient resources, at a fixed income level, to cover his / her living expenses during his / her stay in the country, without burdening the national social welfare system. The amount of sufficient resources is set at €3.500 per month and it can be supported:
i. from the employment or work contract or proof of employment, in the case of dependent work, services or work or
ii. from a bank account. If sufficient resources come from paid employment services, services or work, the above minimum amount refers to net income after payment of the required taxes in the country of employment
The above amount is increased by twenty percent (20%) for the spouse or cohabitant and by fifteen percent (15%) for each child.
• Medical insurance
• 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 (provided that the individuals were not Cyprus tax residents before the employment for 17 years)
– The personal income tax exemption of 50% will be expanded to cover new Cyprus tax residents-employees with salaried income of €55,000.
– Existing beneficiaries of the scheme should be able to extend the exemption from 10 to 17 years. Potential beneficiaries are individuals with income between €55,000 – €100,000 for the remaining period of 17 years.
• Extension of the tax exemption for investment in innovative companies
Consideration of the possibility to grant the tax exemption of 50% for investment in certified innovative companies to corporate investors (The scheme that was in force until 30 June 2021 applied only to individuals).
• Increased tax deductions for Research & Development (R&D) expenses (compared to the actual)
Granting an increased tax deduction on R&D expenses (e.g. by 20%). Eligible R&D expenses will be deducted from taxable income equal to 120% of the actual.
7. Application for Cypriot Citizenship
Right to submit an application for naturalization after 5 years of residence and work in the Republic of Cyprus, instead of 7 applicable today, or after 4 years if they meet the criterion of holding a recognized certificate of very good knowledge of the Greek language.
The Action Plan will be implemented as from 1 January 2022 with the exception of actions 6-7 for which legislative regulations are required. The aim is for the relevant legislation to be submitted to the House of Representatives by the end of December and to be approved in the first quarter of 2022.