Cyprus introduces new strategy for attracting companies to the country

On 15 October 2021, the Minister of Finance of the Republic of Cyprus, Mr. Konstantinos Petrides, announced the Action Plan for Attracting Companies to Operate and Expand their Activities in Cyprus. 

The implementation of the Strategy is expected to start from January 2022. 

The Action Plan goal is to promote Cyprus as an international business centre by introducing the Business Facilitation Unit. Its purpose is to function as a focal point of contact for all international companies of foreign interest, either already operating or wishing to operate in Cyprus, as well as for Cyprus business in specific areas of economic activity, including shipping, high-tech or innovation, pharmaceutical or companies active in the fields of biogenetics and biotechnology. 

Employment of 3rd country nationals and their family members 

The Unit will provide work permits for high skilled employees from third countries, with a minimum gross monthly salary of €2,500. Among the criteria for such eligibility, a university degree title, equivalent qualifications and/or certificates of relevant experience are needed. It is worth to note that the maximum percentage of work permits for third-country nationals per company is set at 70% of all employees over a period of five years.  

Simplified work permit procedures and Social Security Benefits  

Work permits will be issued within one month and will be valid for a maximum of three years, while employee’s spouses will also have access to the country’s labour market. Social security contributions will also be ensured, via bilateral agreements with third countries. Effectively this means that third country nationals are to transfer their social insurance contributions paid to Cyprus upon returning to their country of permanent residence. 

Digital Nomad Visa 

Cyprus will also grant a Digital Nomad Visa for people who wish to live in Cyprus but work remotely in companies operating abroad. The visa will be granted for a period of twelve months, with the right to renew for another two years. The beneficiaries should have a salary of at least €3,500 euro per month, medical coverage and a clean criminal record. 

Tax Incentives 

The strategy is considered to have numerous tax incentives and exemptions.  

Firstly, the tax exemptions that apply to foreign high skilled employees are extended for a period of 17 years. The existing tax exemption is also being extended to cover new residents that are employed with a yearly salary of €55,000+ with a tax exemption of 50%. At the same time, existing employees can extend their benefit from 10 to 17 years, provided that their income falls between the €55-100,000 mark. Moreover, the Minister referenced that qualified R&D expenses shall be deducted from the taxable income at an amount equal to 120%. 

Citizenship by Naturalisation drops to 5 years 

Applicants looking to obtain Cypriot citizenship by naturalisation had to reside and be employed in Cyprus for seven (7) years. With immediate implementation, the Immigration Law (Cap.105) shall be amended to decrease the required number of years to five (5) years and, in cases where the applicant can provide a certificate of “very good knowledge” of the Greek language, four (4) years. 

Additional Actions to be Implemented 

1. Upgrade communications and high bandwidth internet infrastructure;
2. Informative campaign to attract qualified Cypriots employed abroad, and targeted campaign to qualified workforce employed in countries that may currently be experiencing political instability (e.g. Belarus, Lebanon and Armenia); 
3. Promote a better, more complete branding, that of the Country that shall be utilised by all authorities engaged in promoting Cyprus as an attractive investment hub and an international business centre; 
4. Amend and remodel the Companies Law (Cap.113). 

For further information on the new strategy for attracting businesses in Cyprus, Citizenship by Naturalisation or any other questions, please contact Mr. Constantinos Pavlou, Advocate/Legal Consultant at our Eurofast office in Cyprus at nicosia@eurofast.eu