Cyprus has gained a widespread reputation as an international business centre. The combination of advanced technologies and telecommunications, a beneficial tax regime and multinational citizens, along with the excellent geographical location and fantastic weather, make it an ideal place to headquarter your business.
Despite the country's inviting attitude towards foreign companies and third-country professionals, the government has recently launched a new action plan to accommodate further foreign investors in establishing their business in Cyprus.
CYPRUS: Action Plan 2022 for businesses and individuals
The Cypriot government introduced the new Action Plan in 2021 to motivate foreign companies. This new plan is ideal for companies who want to set up or expand their business activities in the country. It's particularly relevant to industries such as technology, shipping, biogenetics and biotechnology, pharmaceuticals, and research and development (R&D). Drafters considered the best practices from other European countries and implemented the plan in January this year.
Easy and Straightforward Processes
The existing processes of setting up a company in Cyprus have already attracted many organisations. Some of these organisations are globally recognised (like Amdocs, Wargaming, Microsoft, NCR, and Amazon). The low administrative and operating costs along with the fast set-up procedures, ensure that business owners have their establishment up and running in Cyprus in no time.
There are no restrictions or licence requirements to enter a business sector unless it follows the regulations (i.e. banking and financial services or media). Business owners can open a corporate bank account and obtain a Cyprus registration and tax number within two weeks. Also, a single stakeholder of any nationality can own a Cyprus LLC without having to be a Cypriot resident.
The Business Facilitation Unit is responsible for business set-up processes. It is the first point of contact for companies needing help with those. The new body oversees several procedures for new companies like
- company name approvals
- company registrations
- granting permits, as well as
- social insurance
- VAT and tax registrations
Check the article of Cyprus Company Formation for more information about the types of companies one can be set up in Cyprus.
With the new action plan, the government enhanced its strategy of attracting foreign businesses and individuals by simplifying and speeding up the processes further. A foreigner can now apply for citizenship after five years of residing in Cyprus, or even four years if they can prove they have good knowledge of the Greek language.
The government also introduced three alternative investment options to the Citizenship by Investment scheme, according to the Aliens and Immigration Regulations. Among these is the option for a third-country national to invest in the share capital of a local business. Some eligibility requirements include the need for the company to have a physical presence in Cyprus and employ at least five persons in Cyprus of any nationality.
Employment of Non-EU Nationals
Foreign interest companies (eligible entities based in Cyprus) can employ non-EU nationals under the new actional plan. The employee must hold a university degree or have at least two years of relevant work experience, to be eligible. Additionally, the employment contract must be for a minimum of two years with a monthly gross salary of €2,500.
Non-EU citizens can obtain an employment permit in Cyprus within just one month from the application date, lasting for three years. Spouses of applicants now have access to employment as well, so long as the applicant's income is more than €2,500 per month and they are not supporting staff.
Digital Nomad Visa
The Digital Nomad Visa is a residence visa, rather than an employment visa, for professionals who work with international companies and want to settle in Cyprus. There are currently 100 beneficiaries in this scheme.
Eligibility conditions for the Digital Nomad Visa:
- Self-employed individual or employee working remotely
- Minimum monthly salary of €3,500
- Medical insurance
- Clean criminal record certificate published from the country of employment or residence
Many tech-oriented companies are considering the headquarters relocation in Cyprus. One of the reasons is to benefit from a low tax of 12.5% on their net profits; this is the lowest tax percentage in the European Union.
A holder of the Digital Nomad Visa can stay in Cyprus for a year. He also can extend this to another two years. They will be able to bring their family along with a residence permit that lasts as long as the holder's visa. However, the family members cannot work in the country. Professionals in this scheme will be liable for tax-paying. This can take ef if they stay in Cyprus for longer than 183 days in the same tax year.
Cyprus Tax Regime
Perhaps the most attractive feature of Cyprus for business owners is its renowned favourable tax regime. When considering where to establish your business, it's hard to resist the 12.5% standard corporate tax, one of the lowest in Europe, or the capital gains tax and succession tax exemptions. It also offers attractive Intellectual Property taxation as low as 2.5%.
Cyprus is in a double taxation agreement with more than 60 countries to prevent double taxation in business transactions. There is no income tax on dividends, interest and royalties
Revised Tax Benefits
The Action Plan 2022 proposed even more tax benefits for individuals and international companies. The government wants to expand the personal income tax exemption to 50% to cover new tax residents who receive an annual income of €55,000 or above. There are also plans to extend the tax exemption for investments in innovative companies and a 20% increase in tax deduction on R&D expenses.
In December 2021, the European Commission published the Third Anti-tax Avoidance Directive (ATAD 3), which will probably take effect in 2023. Its purpose is to increase protection from tax evasion by helping member states identify misuse of shell companies for tax purposes
Quality of Life
As with everything else, the quality of life on this sunny island keeps improving steadily. The country remains one of the top five safest countries to live in, making it ideal to settle down and raise a family. It offers an excellent educational system and healthcare benefits to those who decide to make Cyprus their home.
The excellent weather means residents can enjoy outdoor activities most of the year, with a vast selection of water sports, hiking nature trails and organised road trips. Because of its small size, the short distances and public transportation makes moving around effortless
Headquartering in Cyprus
Cyprus is one of the largest islands in the Mediterranean Sea. It is located at the eastern end of Europe and is very close to three continents. With excellent transportation, it can become a link for Europe, Africa, and Asia. It can be ideal for companies such as the following:
Companies of foreign interest operating in the Republic of Cyprus
- High-tech / Innovation companies
- Shipping companies
- Public companies who are registered on any recognised stock exchange
Over the years, Cyprus proved highly resilient, overcoming a socio-economic crisis. It bounced back quickly and managed to create an impressive talent pool of multinational professionals and global companies while constantly working on improving its laws and regulations for the employment and residency of both locals and foreigners
The top highlights for relocating your business or headquartering to the island are the following:
- Geostrategic location with access to more than 500 million European consumers who want to deal with the MENA region
- Access to a talent pool of employees from the EU and not only who have a speciality in technology and can relocate from anywhere
- Well-educated employees who are highly skilled and, of course, are multilingual.
- There are new Revised Immigration policies that are applied now, especially for non-EU tech professionals.
- The Business Facilitation Unit is set up in Cyprus to make everything easier for businesses.
- It has a desirable corporate and income tax regime.
- Cyprus also has one of the most Favorable IP regimes, which is as low as 2.5%
- The Regulatory framework is fully aligned with the European Union.
- The Legal system is aligned with UK Common Law.
- Cyprus combines a lavish lifestyle in a safe and healthy environment – especially for families.
- One of the top for businesses to consider is the cost of doing business in Cyprus, which is very low compared to other countries.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.