Cyprus offers three options for non-EU nationals to acquire residence. Each of these residence routes offer the additional advantage of leading to Cyprus citizenship, as long as the relevant criteria are met.
The three routes are:
- Permanent Residence Permit
- Temporary Residence Permit through the establishment of a Foreign Interest Company
- Temporary Residence Permit through the establishment of a Small and Medium Sized Innovative Enterprise ("Start-up Visa")
PERMANENT RESIDENCE PERMIT
Cyprus has been a member of the European Union since 2004 and in order to attract additional foreign investment the Cyprus government introduced the Permanent Residence Permit scheme. Through this programme, non-EU nationals can guarantee their residence in the EU.
The requirements for the Cyprus Residence Permit scheme are:
- Purchase residential real estate with a minimum value of €300,000 (+VAT)
- Deposit a minimum €30,000 into a bank account in Cyprus, for a minimum period of three years
- Provide evidence of a secure annual income of at least €30,000. This required annual income, increases by €5,000 for every dependant person, and by €8,000 for every dependant parent or parent-in-law.
The residence permit does not allow the applicant and his/her spouse to undertake any form of employment in Cyprus.
Residence permit holders are however permitted to own Cyprus companies and to receive dividends.
Holders of the residence permit must visit Cyprus once every two years.
A clean criminal record, issued by the authorities of the country of existing residence, needs to be provided upon submission of the application.
Residence permits can also be issued to the investors' spouse and all financially dependant children. The applicants' parents may also be granted a permit.
The Option of Cyprus Citizenship
If the holder of a Permanent Residence Permit resides in Cyprus, this may make them eligible for Cyprus citizenship by naturalisation. Such a residence permit holder would need to reside in Cyprus for seven years, in any ten calendar year period.
TEMPORARY RESIDENCE PERMIT VIA THE ESTABLISHMENT OF A FOREIGN INTEREST COMPANY
Key Features of a Cyprus Foreign Investment Company
A Cyprus Foreign Investment Company (FIC), is an international company which can employ non-EU nationals in Cyprus. Such a company can obtain work permits for relevant employees and residence permits for their family members.
The main criteria for a Cyprus FIC are:
- The third country shareholder(s) must own more than 50% of the total share capital of the company.
- The third country shareholder(s) must contribute at least €170,860 to the share capital of the company. This investment can be used, at a later date, to fund future expenses incurred by the company when it is established in Cyprus.
A key advantage is that after residing for seven years in Cyprus within any ten calendar year period, third country nationals can apply for Cyprus citizenship.
In the shorter term:
- FICs can employ third country nationals, who can apply for appropriate residence and work permits, each of which will be valid for up to two years and are renewable.
- Employees can exercise the right for their families to join them in Cyprus.
- The corporate tax in Cyprus is at a competitive level of 12.5%.
- A Cyprus FIC can also apply for the Notional Interest Deduction Regime, which reduces corporate taxation, by treating new equity in the same way as debt. Please contact Dixcart for more information: email@example.com
- Cyprus has Double Tax Agreements with almost 60 countries.
- Dividend income is exempt from corporate and individual taxation
- Dividend distribution to shareholder(s), is exempt from withholding tax.
TEMPORARY RESIDENCE PERMIT VIA THE ESTABLISHMENT OF A SMALL AND MEDIUM SIZED INNOVATIVE ENTERPRISE (START-UP VISA)
The Cyprus 'Start-up Visa'
The Cyprus Start-up Visa Scheme allows entrepreneurs (individuals or in a team), from third countries (outside the EU and outside the EEA), to enter, reside and work in Cyprus in order to establish, operate, and develop a start-up business.
Who Can Benefit from the Scheme?
Non-EU country nationals who are the founders or owners of an enterprise that meets the following requirements:
- the enterprise must be innovative – research and development costs must represent at least 10% of its operating costs, in at least one of the three years preceding the submission of the application, as certified by an external auditor. In the case of a new enterprise, without any financial history, the evaluation will be based on a Business Plan that must be submitted to the Ministry of Finance.
- the Business Plan must provide that the enterprise's head office and tax domicile will be established in Cyprus.
Team consisting of non-EU nationals:
- Founders that consist of a maximum of five individuals, or at least one founder plus other senior executives, up to a maximum of five individuals. The senior management must be to C-suite level employees (managers).
- The team must own more than 50% of the company shares.
- The founder must have access to a minimum €10,000. Where there are more than two founders, the total capital must be a minimum €20,000.
- At least one of the team members holds an undergraduate or equivalent professional qualification.
The requirements mentioned above, relating to individuals and the enterprise criteria, also apply to team applications.
What are the Benefits of the Start-up Visa Scheme?
- Individuals and team members, approved under the Start-up Visa Scheme, will benefit from the right to undertake economic activity and to reside in Cyprus for one year, with the option of renewing this for at least another year.
They have the right to self-employment and/or the right to paid employment in the company registered under the Start-up Scheme in Cyprus, with the prospect of permanent residence in Cyprus, as long as the business 'succeeds'. Additional family members can move to Cyprus and a specified number of individuals from non-EU countries, can be employed, without prior approval from the Department of Labour, again assuming the success of the business. Success or failure of the business, will be assessed at the end of the second year of trading.
- Amendments to the Income Tax Law mean that there are special tax incentives for 'natural persons' who are investing in innovative companies.
The type of investment subject to the tax reduction include: the capital investment, investment in debt instruments, investment in loans, follow-on investments. The tax reduction can be up to a maximum 50% of the investor's taxable income in the year that the investment takes place. The amount of the tax reduction cannot be greater than €150,000 per year. It is possible for the tax reduction to be carried forward and enjoyed anytime during the five years following the investment.
Originally published 22 February 2021
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.