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Corporate Tax ,Investment in Cyprus ,Tax Updates

Cyprus new strategy for attracting investments in the country

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

During a presentation at the Presidential Palace, Cypriot President Nicos Anastasiades said it would be a new important strategy for attracting companies to operate or expand their activities in Cyprus. Taking into account best practices from other European countries, he added, it aspires to make Cyprus a Sustainable Business and Trade Centre of the broader region and Europe.

“The emphasis is on domains related to High Technology, Shipping, Innovation, Research and Development, Biogenetics and Biotechnology, without excluding any other companies that choose Cyprus as their place of business,” he noted.

He added that this strategy is also in line with the guidelines of the European Commission and the Recovery and Resilience Facility.

“The implementation of the strategy and the establishment and operation of international companies in Cyprus will offer high and sustainable added value to the economy, through the creation of new jobs and increased demand for domestic services, but will also redefine the country’s development model,” President Anastasiades stressed.

Another goal, as the President said. is the connection of education or training with the labor market.

Presenting the new strategy, the Minister of Finance Constantinos Petrides said that it offers further tax incentives and it corrects some distortions in labour issues and in the immigration regime. He also said that there’ s competition between European countries in attracting such investments, with many countries having their own programs.

“I believe that ours is a very competitive program,” he said.

Among other things, a Business Facilitation Unit is established, that will function as the focal point of contact for all companies of international interest, either operating in Cyprus or wishing to operate in the country, as well as for Cyprus business in specific areas of economic activity, including Cypriot shipping companies, Cypriot high-tech or innovation companies, Cypriot pharmaceutical companies or Cypriot companies active in the fields of biogenetics and biotechnology.

This Unit will facilitate working permits for high skilled third countries employees, with a minimum gross monthly salary of €2,500, while a university degree, title, equivalent qualifications or certificates of relevant experience are also needed.

The maximum work permits for third-country nationals per company is set at 70% of all employees over a period of five years. The permits will be issued within one month and will last up to three years, while employee’s spouses will also have access to the country’s labour market.

Cyprus will also grant the so-called Digital Nomad Visa for people who wish to live in Cyprus but work in companies operating abroad. Beneficiaries will be third-country nationals, who work remotely using information and communication technologies for employers and clients outside Cyprus. The visa will be granted for a period of twelve months, with the right to renew it for another two years. The beneficiaries should have salaries of at least €3,500 euros per month, medical coverage and a clear criminal record from the country of residence.

According to the strategy, tax exemptions that apply to foreign high skilled employees in the Republic are extended for a period of 17 years. The existing tax exemption is also being extended to cover new residents-employees with a yearly salary from the employment of €55,000 or more with a tax exemption of 50%.

Existing employees have the opportunity to extend the benefit from 10 to 17 years. Potential beneficiaries are persons with incomes between €55,000- €100,000. These tax incentives also apply to Cypriots who have lived abroad for at least ten years and wish to repatriate to the Republic.

At the same time, the employees of these companies will have the right to submit an application for naturalization after five years of residence and work in the Republic or after four years if they have a recognized certificate of very good knowledge of the Greek language.

The transfer of social security contributions will also be ensured, through intensified efforts to conclude bilateral agreements with third countries.

Replying to questions, the Minister of Finance said that this strategy has nothing to do with the Cyprus Investment Program (CIP), as it concerns people who are active in Cyprus, employees, not companies and people who choose Cyprus as their country of residence.

He also said that there’re similar programs in other European countries and that the strategy was in line with the European Commission’s recommendations for digital evolution, green transition and innovation.  He added the tax incentives are related to income tax and not corporate tax and that there’s no European framework for income tax.

The main changes will affect:

1. Amendment of the International Business Companies policy for Companies that will be part of the newly established Business Facilitation Unit

An amendment of the International Business Companies policy for Companies that will be part of the newly established Business Facilitation Unit. The main provisions include a General Minimum salary of €2.500 which will be introduced for all highly skilled employees, provided that they possess the relevant academic skills or at least 2 years experience. In addition to that, residence and work permits will have a validity of up to 3 years. For the 5-year period, 70% of the total number of employees can be Non-EU Nationals. Companies need to be able to employ Non-EU Nationals as supporting staff with salaries below €2.500 (Maximum 30% of the total supporting staff of the entity).

2. Employment of family members

Immediate and free access to employment will be permitted for the Spouses of Non-EU Nationals who are employed in a Company operating under the provisions of the Business Facilitation Unit.

3. Digital Nomad Visa

A new type of permit will be introduced where holders of the permit have no employment rights. This Digital Nomad Visa will have a maximum quota of 100 applications. The permit will be granted for 1 year, whereas subsequent renewals will be valid for another 2 years. Digital nomads’ funds from abroad will have a minimum threshold of €3.500 plus an additional percentage for each of their companion, 20% and 15% for their spouse and minor respectively.

4. Naturalization of Non-EU Nationals that are employed in Cyprus

Moreover, non-EU Nationals who are employed in Cyprus, now have the chance to become Cyprus Citizens. Individuals looking to apply for Naturalization will now be eligible to do so within 5 years, instead of 7. This period can be lessen to 4 years for those who have a very good knowledge of the Greek language with a proof of certification. For all existing pending applications, a decision can be formulated to expedite the procedure.

5. Simplification of the process for obtaining Permanent Residency

Last but not least, the ministry of Interior has aimed to simplify the process for obtaining Immigration Permits and Long-Term residency permits. Relevant Regulations of the Aliens and Migration Law will be amended in order to speed up the process of the applications.

Source: in-cyprus