30 Nov New measures aiming to attract foreign investments to Cyprus announced by the Ministry of Finance
The Ministry of Finance has recently announced a new strategy for attracting foreign investments to expand business activities in Cyprus, through new policies that will come into force by the 1.1.2022.
The new very attractive policies that will be implemented are the following:
- Τhe establishment of a BUSINESS FACILITATION UNIT
- A New policy for the Employment of third Country nationals
- The Right to Family Reunification of third-country nationals included in third-country employment policy.
- A more simplify and speed up process of Granting Category E work permit (Long Term Resident Status).
- The new DIGITAL NOMAD VISA.
- The Introduction of Tax Incentives
- Naturalization procedure
- The Establishment of A Business Facilitation Unit
A new Business Facilitation Unit will be established aiming to support and facilitate companies with the establishment of their entity, including among others, a company registration and name approval, registration of the company with the Social Insurance Registry and Employers’ Register and registration of the company with the Tax Authorities.
The Business Facilitation Unit will also provide information and guidance as to the necessary licenses to operate in Cyprus
Further to the above, the Business Facilitation Unit will be responsible to accelerate the issuance and renewal of residence and employment permit in Cyprus
- A New policy for the Employment of third Country nationals
The Government proposed also a new policy for the Employment of third country nationals who will be employed under the following eligible companies:
- Foreign companies/undertakings operating in the Republic of Cyprus or foreign companies/undertakings intending to operate in the Republic of Cyprus, that operate independent offices in Cyprus, housed in appropriate independent offices, separate from residences or other offices
- Cypriot shipping companies
- Cypriot high-tech/ innovative companies
Cypriot pharmaceutical companies or companies active in the sectors of biogenetics and biotechnology.
According to this new policy, the employment permit will be issued to third country nationals with minimum gross monthly salary of €2.500, provided that they fulfill that they fulfill certain criteria.
Some of the most important criteria are:
- Having in their Possession a university diploma or title or equivalent qualification or certificates of relevant experience in an employment position lasting at least 2 years.
- Having an employment contract of not less than two years.
- Have a Clean criminal record
The duration of the Residence and Employment permit has been increased from (2) two years’ maximum to (3) three years.
The issue of such Residence and Employment Permit remains 30 days from the date of submission of the relevant application and documents.
The maximum number of third country nationals that can be allowed to be employed under this new policy is 70% of the total number of employees employed within a period of 5 years, from the date the company joined the Business Facilitation Unit.
Employment of third-country nationals as supporting staff is permitted, provided that it does not exceed 30% of all support staff and provided that the third-country national and the employer have entered into an employment contract duly ratified by the competent authority in accordance with the existing applicable law.
The salary level is determined on the basis of the existing applicable legislation.
3. The Right to family reunification of third-country nationals included in third-country employment policy Ministry of Finance
The new policy allows Immediate and free access to the Labour market for spouses whose financial supporter has obtained a residence and work permit in the Republic, and who receive a minimum gross monthly salary of € 2,500 (excluding supporting staff).
4. A Simplify and speed up process of Granting Category E work permit (Long Term Resident Status)
The new policy provides a more accelerating procedure of granting immigration permit under CATEGORY E – Long-Term Resident Status to persons who have been offered permanent employment by their company in Cyprus.
5.The new DIGITAL NOMAD VISA.
(with a maximum initial limit of 100 beneficiaries)
The Government has introduced the Digital Nomad visa who shall be offered to Third-country nationals that are self-employed or salaried employees, working remotely with employers / clients outside Cyprus, through the use of information and communication technologies.
Holders of the digital nomad visa will have the right to stay in Cyprus for up to one year, with the right to renew for another two years. Further to that, they can be accompanied by their family members, who are granted, upon request, a residence permit that expires at the same time as that of the financial supporter.
However, during the stay in Cyprus, the spouse or partner and the minor members of the
family of the financial supporter are not allowed to engage in any form of economic activity in the country
If the holder of the Digital Nomad Visa resides in Cyprus for one or more periods totaling more than 183 days within the same tax year, they are considered tax residents of Cyprus, provided that they are not tax residents in any other Country.
The main criteria (among others) in obtaining such visa are:
- Proof that he/she has sufficient funds – a stable income to cover living expenses during the stay in the country, without recourse to the national social welfare system. The amount of sufficient funds is set at three and a half thousand euros (€3.500) per month and can be proven by:
- a Bank Account. If sufficient funds come from paid employment services, services or works, the above minimum amount refers to net
- Income after payment of the required taxes in the country of employment.
- The employment contract or proof of employment, in the case of dependent work, services or works. The above amount is increased by twenty percent (20%) for the spouse/partner and by fifteen percent (15%) for each child.
- Medical Insurance
- Clear criminal record from the country of residence
6.Introduction of Tax Incentives
The government has proposed expansion of the 50% tax exemption applicable to employees in Cyprus to new residents-employees who receive an annual income of € 55,000 from their employment.
Furthermore, the government’s proposal provide for the extension of the period of the tax exemption applicable to existing beneficiaries of the program from 10 years to 17 years.
Additional tax incentives for corporate entities that are being considered by the government are:
The extension of the 50% tax exemption for investment in certified innovative companies to corporate investors (currently, this is only applicable to natural persons).
Grant of a further discount on research and development expenses (e.g. by 20%) so that eligible research and development expenses may be deductible from taxable income in an amount equal to 12% of the actual taxable income.
7. Naturalization procedure
The government has also proposed the right to submit an application for Naturalization after 5 years of residency and employment in Cyprus instead of the 7 years rule as applicable today.
A further reduction to 4 years will be applied if the potential applicants meet the criteria of holding a recognized certificate of very good knowledge of the Greek language.