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On the 15th of October 2021 the Ministry of Finance presented an Action Plan for attracting companies to operate or expand their activities in Cyprus, strengthening Cyprus position as an international business center.
The aim is for the Action plan to be implemented as of 1st of January 2022 following its formal approval by the Cyprus Parliament.
The main points of the Action Plan are summarized below:
Transformation of the existing Fast Track Business Activation Mechanism into a Business Facilitation Unit (BFU)
The BFU will function as the main and primary contact for new and existing international business companies. Its main responsibilities will be:
- The provision of services for the establishment of corporate entities including company registration and name approval, registration with the Social Insurance Registry and the Employers’ Registry and registration with the VAT and Income Tax Offices
- Guidance for the establishment and operation of companies in Cyprus
- Facilitation for the issuance of residence and employment permits in Cyprus.
Revised policy for the issuance of temporary residence and work permits to third country nationals
Eligible Companies:
- Foreign companies operating in Cyprus or foreign companies wishing to establish presence in Cyprus
- Cyprus shipping companies,
- Cyprus high-tech/innovation companies,
- Cyprus pharmaceutical companies or companies operating in the fields of biogenetics and biotechnology.
The main provisions are as follows:
- The ability to employ third country nationals comprising up to 70% of the total number of employees on condition that they have the required academic skills or at least two years of relevant experience and earn a minimum gross monthly salary of €2.500 per month.
- Companies may also employ up to 30% of their support staff from third countries.
- The duration of the residence and work permit can be up to three years and will be issued within one month from the application date
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 Cyprus, and who receive a minimum gross monthly salary of €2,500 per month (not applicable for support staff) will have immediate and free access to employment in Cyprus.
Simplification of the process for granting work permits
Relevant amendments are expected regarding the Regulations of the Aliens and Migration Law, which will simplify the process and overall criteria based on which work permits are granted.
Digital nomad visa with a maximum of 100 applications
A new type of residence permit will be introduced, for third country nationals who wish to live in Cyprus but work remotely for clients or employers outside Cyprus.
The residence status will include:
- The right of an individual to stay in Cyprus for up to one year, with the right to renew for another two years;
- The individual can be accompanied by his/her family members (spouse and children) but they are not allowed to be employed in or to engage in any kind of economic activity in the country.
- They are considered Cyprus tax residents for each financial year in which the number of days they physically in Cyprus exceeds 183.
Relevant prerequisites (among others):
- The minimum amount of funds remitted to Cyprus from abroad must exceed €3,500. This is increased by 20% for the spouse and by 15% for each child;
- There must be adequate medical insurance
- The individual and spouse/partner must provide a clean criminal record certificate from their country of residence.
Tax incentives
- Extension of the existing income tax exemption of 50% on new employment in Cyprus
- The personal income tax exemption of 50% will be expanded to cover new Cyprus tax resident employees with salaried income of €55,000 (previously €100.000) or more.
- Existing beneficiaries of the scheme should be able to extend the exemption period from 10 to 17 years and take advantage of the lower threshold for the remaining period.
- Extension of the 50% deduction from taxable income (subject to limits and conditions) granted for investments in innovative companies to corporate investors (details to be confirmed).
- Increased tax deductions for Research & Development (R&D) expenses
120% of Eligible R&D expenses will be deducted from taxable income.
Application for Cypriot Citizenship
The time required before an individual living and working in Cyprus becomes eligible to apply for Cyprus citizenship will be reduced from 7 to 5 years and further to 4 years if he/she holds a recognized certificate showing very good knowledge of the Greek language.
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