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On Friday, October 15, 2021, the Ministry of Finance of Cyprus announced its new action plan to attract foreign investment and strengthen business activity in Cyprus, encompassing various policies that will come into effect in the first quarter of 2022.
The new policies that will be implemented are as follows:
1. Creation of the Business Facilitation Unit
According to the new action plan, the existing accelerated trade activation mechanism for international companies will be transformed into a trade facilitation unit for companies operating or expressing interest in operating in Cyprus.
The main responsibilities of the Unit will be:
- Provision of various services for the establishment of legal persons, including, among others, the registration of the company and approval of the name, the registration of the company with the Social Insurance Register and the Register of Employers and registration of the company with the tax authorities.
- Providing advice for the creation and operation of businesses in Cyprus.
- Facilitation of the issuance of residence and work permits to employees of companies of foreign interest in Cyprus.
2. Revised policy for issuing temporary residence permits and work permits to highly qualified third-country nationals and support staff
The government has proposed a review of the conditions for issuing a temporary residence / work permit to third country nationals employed by:
- Foreign interest companies / foreigners operating in Cyprus or foreign companies wishing to operate in Cyprus which have a physical presence in Cyprus, including operating independent offices in Cyprus which are separate from any residence or private office.
- Cypriot shipping companies.
- Cypriot high-end technology / innovation companies.
- Cypriot pharmaceutical companies or Cypriot companies operating in the fields of biogenetics and biotechnology.
According to the action plan, a residence and temporary work permit will be issued to third country nationals with an acceptable minimum gross monthly salary of â¬ 2,500, provided the following conditions are met:
- Possess a university degree or title or an equivalent qualification or certificates of relevant experience in an employment position lasting at least 2 years.
- Presentation of an employment contract of at least two years.
The maximum number of third country nationals that can be employed under this policy is 70% of the total number of employees employed over a period of 5 years, from the date the company joined the unit. business facilitation.
The employment of third country nationals as support staff will also be allowed provided that it does not exceed 30% of the total support staff employed by the company.
Permits will be issued immediately within one month and will last for up to three years.
3. Simplify and speed up the process of granting work permits (CATEGORY E – Long-term resident status)
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.
4. Introduction of DIGITAL NOMAD VISA (with a maximum initial limit of 100 beneficiaries)
Independent third-country nationals or employees working remotely using information and communication technologies, with clients or an employer outside of Cyprus for a period of 12 months, will be entitled to digital nomadic visas.
Holders of digital nomadic visas will have the right to stay in the country for a period of up to one year with the right to renew their residency for an additional two years. They may be accompanied by members of their family who, during their stay in Cyprus, are not, however, authorized to engage in paid employment or to exercise any economic activity in the country.
If the holder of a digital nomad visa resides in Cyprus for one or more periods which in total exceed 183 days in the same fiscal year, then he will be considered as tax resident of Cyprus, provided that he is not residing in another country. .
5. Introduction of various tax incentives
The government has proposed to extend the 50% tax exemption applicable to employees in Cyprus to new resident-employees who receive an annual income of â¬ 55,000 from their employment.
In addition, the government’s proposal provides for the extension of the tax exemption period applicable to current beneficiaries of the program from 10 years to 17 years.
Additional tax incentives for legal persons envisaged by the government are as follows:
- The extension of the 50% tax exemption for investments in certified innovative companies to institutional investors (currently this only applies to natural persons).
- Granting of an additional deduction on research and development expenses (eg 20%) so that eligible research and development expenses can be deductible from taxable income by an amount equal to 12% of actual taxable income.
The government is also proposing the right to apply for naturalization after 5 years of residence and employment in Cyprus instead of the 7-year rule applicable today or a further reduction to 4 years if potential applicants meet the criteria for possession of a recognized certificate. very good knowledge of the Greek language.
Further information on the action plan will be published in the coming weeks.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
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