The announced action plan by the Ministry of Finance for attracting companies to operate and / or expand their activities in Cyprus
A summary of the actions is set below. The Action Plan will be implemented starting from 1.1.2022 with the exception of actions 6-9 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.
1. Business Facilitation Unit
Transformation of the existing Fast Track Business Activation Mechanism into a Business Facilitation Unit operating or expressing interest to operate in Cyprus, with responsibilities for:
i. Company creation (company registration, name approval, registration in the Social Insurance register, Registration in the VAT register and in the Income Tax)
ii. Guidance for relevant permits for activation in Cyprus
iii. Acceleration in the issuance and renewal of residence and employment permits
2. New policy for employing third country nationals
Eligible Companies:
i. Companies/ foreign businesses in Cyprus or foreign businesses wishing to establish presence in Cyprus which have a physical presence in Cyprus including establishment/
operation of independent offices that are separate from any private residence.
ii. Cyprus shipping companies.
iii. Cyprus high technology / innovation companies.
iv. Cypriot pharmaceutical companies or companies operating in the fields of biogenetics and biotechnology.
Issuing of temporary Residence and Employment Permits in Cyprus for third country nationals with minimum acceptable gross monthly salary of €2.500, provided that the following conditions are met:
i. Possession of a university diploma or title or equivalent qualification or certificates of relevant experience in a corresponding employment position lasting at least 2 years.
ii. Presentation of an employment contract of not less than two years.
Employment of support staff (with gross monthly salary less than €2.500)
In addition, the employment of third-country nationals is permitted provided that it does not exceed 30% of all support staff and provided that the third-country national and the employer have entered into an employment contract duly approved by the relevant authority in accordance with the applicable law.
Duration of residence and employment permits
The permits will be issued immediately within 1 month and will last up to 3 years.
3. Right of family reunification for third-country nationals who are part of the policy on employment of staff from third countries
Direct and free access to the labour market with paid work, to spouses whose maintainer has obtained a residence and work permit in the Republic, and who receive a minimum gross monthly salary of € 2,500 (does not apply to support staff)
4. Simplification and speed-up of the process of granting work permits (Category E – Long-Term Resident Status)
5. Introduction of Digital Nomad VISA (with a maximum initial limit of 100 beneficiaries)
Beneficiaries
Third country nationals self-employed or employees who work remotely using information and communication technologies, with employers / clients outside Cyprus.
Residence status
i. They have the right to stay in the country for up to one year, with the right to renew for another two years.
ii. They 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 (concerns persons who have entered into a civil union) 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 tax residents of Cyprus meaning they are not tax residents in any other State.
Prerequisites (among others):
Evidence that he 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 €3.500per 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.
i. Health Coverage (GESY)
ii. Clean criminal record certificate from the country of residence
6. Tax Incentive: Expansion of the income tax exemption that applies to employees in the Republic
i. 50% tax exemption for new residents-employees with pay from an employment of €55,000
ii. Existing employees with earnings of less than € 100K have the possibility to extend the benefit from 10 to 17 years
iii. Potential beneficiaries with income (€ 55K- € 100K) for the remaining period of 17 years
7. Tax Incentive: Extension of tax exemption for investment in innovative companies
Consideration of the possibility of extending the 50% tax exemption for investment in certified innovative companies and by corporate investors.
8. Tax Incentive: Increased tax deduction (compared to the actual one) for research and development expenses
Granting an increased discount on research and development expenses (e.g. by 20%). Eligible research and development expenses will be deducted from taxable income in an amount equal to 120% of the actual.
9. Application for acquisition of 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.
by Elias
