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Friday 15e from October 2021, the Cypriot government announced its new action plan to attract foreign companies to establish or expand their activities in Cyprus. The announcement came a year after the abolition of the previous investment program.
The announced new strategy aims to turn the page and attract foreign companies to the island and stimulate economic activity by promoting foreign investment. The action plan will be implemented from 1.1.2022
Establishment of the Business Facilitation Unit
The new policy aims to facilitate the establishment of foreign companies to operate and / or relocate their registered office and / or develop their business activities in Cyprus. In light of this objective, the existing accelerated trade activation mechanism for companies of foreign interest will be transformed into a “trade facilitation unit” for foreign companies operating in Cyprus or for foreign companies wishing to expand their activities to Cyprus.
The Business Facilitation Unit will be responsible for providing the various services necessary for the constitution of legal persons. He will oversee the name approval of new businesses, business registration, registration with social insurance and VAT authorities and with the Republic’s tax authorities. It will also provide guidance on the establishment, licensing and operations of such companies and facilitate the issuance and renewal of residence and work permits for staff employed by companies of foreign interest.
Revised policy for issuing residence and work permits to highly qualified third-country nationals and support staff
The Cypriot government has once again reviewed the employment policy for highly qualified personnel from third countries employed by companies of foreign interests, as well as those employed by Cypriot companies which bring added value to the economy and society. local workforce.
The eligible companies that can benefit from this revised policy are:
- Foreign interest companies and enterprises operating in Cyprus or foreign interest enterprises wishing to establish their operations on the island, having a physical presence in Cyprus and which operate or will operate from independent offices on the island and are or will be accommodated in appropriate premises, separate from any private residence including:
- Cypriot shipping companies
- Cypriot high technology / innovation companies,
- Cypriot pharmaceutical companies or Cypriot companies active in the fields of biogenetics and biotechnology
Eligible companies may employ highly qualified third-country nationals in key positions who are in possession of a university degree or equivalent title or qualification or certificate of relevant experience in a corresponding post. ” at least 2 years with a minimum gross monthly salary of € 2,500 and provided that their employment contract is for at least two years.
Relevant work permits for employees falling under this revised policy will be issued immediately within one month and will last for up to 3 years.
There is a maximum number of third country nationals who can be employed under this policy. Only 70% of the total number of all employees can be employed there within a period of 5 years, from the date of joining the Business Facilitation Unit. In the event that 5 years have passed and it is not possible to employ 30% Cypriot workers, this will be reviewed on a case-by-case basis.
Eligible companies will also be allowed to employ third country nationals as support staff with a gross monthly salary of less than € 2,500. The employment of third country nationals as support staff is allowed, provided that it does not exceed 30% of the total support staff and provided that third country nationals and employers have concluded a contract work approved by the competent authority in accordance with applicable legislation. The amount of their salary is determined by the legislation in force.
The duration of their residence and work permits may be up to 3 years.
Family reunification rights for third country nationals employed under this revised policy
It is important to note that family reunification rights are granted to third country nationals employed by this revised policy and regulated by the Business Facilitation Unit.
Direct and free access to the labor market as employees is granted to spouses of third-country nationals who have obtained a residence and work permit in the Republic, thanks to this revised policy and who receive a minimum gross monthly salary. from 2500 €.
This right does not extend to support staff who receive a monthly salary of less than € 2,500.
Streamlining the process for issuing Category E work permits
The action plan provides for the simplification and acceleration of the process of granting immigration and work permits in CATEGORY E – Long-term resident status to people who have been offered a permanent job and whose employment does not create undue local competition.
Introduction of the digital nomad visa.
Significantly, the action plan provides for the introduction and issuance of a NOMAD DIGITAL VISAS with an initial maximum limit of 100 beneficiaries.
The persons entitled to these visas will be third-country nationals who are either self-employed or employees who work remotely using information and communication technologies to communicate with their clients or employers who must be located outside of Cyprus.
Holders of a DIGITAL NOMAD VISAS have the right to stay in the country for up to one year, with the right to renew their visa for another two years. They may be accompanied by members of their family, to whom a residence permit is issued upon request which will expire at the same time as that of the main applicant. During their stay in Cyprus, the spouse or partner and minor family members of the main applicant are not allowed to provide dependent work or to engage in any economic activity in the country.
In the event that the holders of these visas reside in the Republic for one or more periods which in total exceed 183 days in the same fiscal year, then they are considered to be tax residents of Cyprus provided that they are not tax residents in another state.
The VISA DIGITAL NOMAD is granted under certain conditions and prerequisites. For example, they must prove that they have sufficient resources at a fixed income level of at least € 3,500 per month to cover their living expenses during their stay without burdening the national and social system and must have insurance coverage. insurance and a clean criminal record. The above prerequisites are indicative and additional requirements apply.
Introduction of various tax incentives
The new policy includes some legislative proposals for granting tax breaks and tax breaks that will be submitted to the House of Representatives by the end of December 2021. The government expects these proposals to be approved by the first quarter. 2022..
The government has proposed a 50% tax exemption to be granted to new resident-employees who receive an annual income from their employment of € 55,000.
In addition, the government’s proposals provide for the extension of the tax exemption applicable to eligible employees of the Republic who have an income below 100,000 € from 10 years to 17 years, provided that they have not been domiciled in Republic for a period of 17 years before the start of their employment.
Potential beneficiaries of this tax benefit with an income of 55K € to 100K € should be able to benefit from this exemption for the remaining duration of the 17 years.
The government is also proposing the extension of the 50% tax exemption for investments in certified innovative companies to private investors. The regime in force until the end of June 2021 only authorized tax exemption for natural persons.
A proposal is also put forward for the granting of an increased discount on research and development expenses, for example of 20%. Eligible research and development costs will be deducted from taxable income at 120% of the actual.
Proposal for naturalization
The government is also proposing the right to apply for naturalization after 5 years of residence and employment in the Republic instead of the 7-year rule applicable today or a further reduction to 4 years if potential applicants meet the criteria. holding a recognized diploma. certificate of very good knowledge of the Greek language.
The overall benefit of the new policy
There is no doubt that in addition to attracting foreign companies to the island, Cypriot companies and companies whose objects correspond to those specified in the eligibility criteria will also benefit from this new policy.
During the presentation of the new strategy at the presidential palace, President Nicos Anastasiades, underlined that it aspires to make Cyprus a sustainable business and trade center of the wider region and of Europe. He also noted that the policy took into account best practices from other European countries. The focus is on areas related to technology, shipping, innovation, research and development, biogenetics and biotechnology, not excluding other companies that choose Cyprus as their place of business .
There is no doubt that great hopes rest on this policy to restore the credibility of the legislative framework aimed at attracting business and foreign investment to the island.
Cyprus is a very attractive destination for business operations and investments due to its many competitive advantages which include, but not limited to, its attractive tax regime, its advanced and stable business, banking and financial services, its transparent legal framework as well as its high quality of life. , excellent education and health system.
The government is optimistic that the new action plan it announced will boost economic growth and activity by further encouraging foreign investment in the island and thus provide high and sustainable added value to the economy. through the creation of new jobs and increased demand for domestic services. It remains to be seen to what extent foreign and domestic companies meeting the criteria will reap the benefits of this new action plan.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.