Cyprus. A new hometown for startups.

Cyprus government in a continuous effort of modernising the sectors of the economy contributing to GDP growth introduced an ambitious plan in attracting investment to sectors relating to technology and more specifically to Research and Development. The incentives are aiming in attracting both local and foreign direct investments in the sector of Research and Development (R&D) which are involved in producing innovative products, services and processes.

Incentives have been designed in attracting investment by providing generous tax breaks, removal of government red tape and less strict immigration rules for citizen’s origin from countries outside the EU, and can be enjoyed once the operations are set and managed through Cyprus.

In the below brief analysis the incentives offered by the local mechanisms and schemes are distinctly divided in Companies, Owner of the companies – Investors and Employees of such companies.

why startup in Cyprus guide

 

Companies.

Companies which are operating in research and development sector of the economy are enjoying substantial benefits in relation to the following:

  • Government has introduced a committee which examines investment proposals and can provide through a fast track process licencing to innovative businesses removing red tape. Businesses can initiate their operations within few months and avoid unnecessary delays.
  • Intellectual Property Box – Tax breaks: Companies involved in the research and development of innovative products or processes and have registered a patent for such intangible assets are entitled to tax breaks of 80% of the revenue derived from such assets. Also a 20% capital allowance is given over the capitalised cost of the asset.
  • Notional interest deduction calculated as percentage over the cost of investment in equity of the company.
  • Capital allowances can be applied over the cost of assets owned by the company ie buildings, offices, labs, computer and other equipment, computer software, fixture and fittings.
  • Cyprus based companies are eligible for various business and entrepreneurship funds of the European Union such as the Horizon 2020 program. 

 

Owners/Directors of innovative companies.

Owners/shareholders and directors of innovative companies using Cyprus as their primary resident as part of managing the operations in Cyprus enjoy the following:

  • Nationals that originate from Non – EU countries can obtain a working permit visa easily as part of the start – up visa scheme.
  • EU nationals can relocate, live and work in Cyprus by obtaining a work permit for EU nationals (MEU1) certificate easily.
  • Owners/shareholders and directors who invest in Cyprus companies or property can also obtain a Cyprus passport.
  • Owners of innovative companies can benefit from the Non – Domicile status introduced by Cyprus either by becoming Cyprus Tax residents using the 183 days rule or 90 days rule which exempts totally from withholding tax dividends receivable from Cyprus or overseas companies, interest and rents receivable from Cyprus or overseas.
  • 50% tax exemption on employment income over €100k per annum for persons employed in Cyprus companies and in the past have not been employed in Cyprus. The exemption applies for a 10 year period.
  • 50% of taxable income exemption (to a maximum of €150k) of the amount invested in small and medium innovative enterprises for each year.
  • Income deriving from disposal of securities both in Cyprus and abroad are exempt from any taxes.

 

why startup in Cyprus guide

 

Employees.

  • Employees of innovative companies which are nationals that originate from Non – EU countries can obtain a working permit visa easily as part of the start – up visa scheme.
  • EU nationals can relocate, live and work in Cyprus by obtaining a work permit for EU nationals (MEU1) certificate easily.
  • Employees of innovative companies can enjoy a 50% tax exemption on employment income over €100k per annum for persons employed in Cyprus companies and in the past have not been employed in Cyprus. The exemption applies for a 10 year period.
  • Employees of innovative companies can benefit from the Non – Domicile status introduced by Cyprus either by becoming Cyprus Tax residents using the 183 days rule or 90 days rule which exempts totally from withholding tax dividends receivable from Cyprus or overseas companies, interest and rents receivable from Cyprus or overseas.

 

startup in cyprus2 

 

How can KTC help you?

Our firm can assist you in setting up your business in Cyprus and managing all the formalities in the process of operating your innovative business. Our services can assist you on the following:

  • Corporate services: Company formation, Tax and Social Insurance registrations.
  • Banking services: Bank Account opening Services.
  • Tax services for both the Company and the owners/employees.
  • Human resource management: Assistance in hiring local and overseas personnel.
  • Advisory services.
  • Compliance and taxation services.
  • Audit and Assurance services.

 

why startup in Cyprus guide