Action Plan for attracting companies to operate and / or expand their activities in Cyprus

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The Minister of Finance, Mr. Konstantinos Petridis, gave a press conference today here regarding the Action Plan for attracting companies to operate and / or expand their activities in Cyprus.

Both the Minister’s presentation and the key plans have been attached (in Greek at this stage) for reference.

The key points are summarized below as drawn from the attached presentation and action plan:

  1. (Proposed Timeline – First Trimester 2022) TRANSFORMATION OF THE FAST-TRACK BUSINESS ACTIVATION MECHANISM TO BUSINESS FACILITATION UNIT

with responsibilities for

  1. Company creation (company registration, name approval, registration in the Social Insurance register, Registration in the VAT register and in the Income Tax)
  2. Guidance for relevant permits for activation in Cyprus
  3. Acceleration in the issuance and renewal of residence and employment permits

 

  1. (Proposed Timeline – January 2022) NEW POLICY FOR EMPLOYING 3RD COUNTRY NATIONALS
    1. Eligible companies
      1. companies / companies of foreign interests operating in the Republic of Cyprus or companies / companies of foreign interests that intend to operate in Cyprus

and operating independent offices in Cyprus, which are housed in suitable spaces, separate from any private home or other office

  1. Cyprus shipping companies
  • Cypriot high technology / innovation companies
  1. Cypriot pharmaceutical companies or Cypriot companies active in the sectors of biogenetics and biotechnology
  1. Residence Permit Criteria
    1. Minimum gross salary Euro 2500
    2. Possession of a university diploma or degree or equivalent qualification or certificate relevant experience in a corresponding employment position of a 2-year duration
  • Presentation of an employment contract of not less than two years
  1. Duration of Residence and Working Permit
    1. Upto 3 years
  2. Issue of Residence and Working Permits
    1. Immediately within a month
  3. Permitted employment number
    1. The maximum number of third-country nationals eligible for employment is defined at 70% of the of all employees in a period of 5 years, from the date of entry into  the Business Facilitation Unit. In case that after 5 years  it has not been possible to employ the 30% of workers with Cypriot nationality, the case will be reviewed.
  4. Employment of support staff
    1. The employment of third-country nationals is allowed, provided that it does not exceeded 30% of all support staff and noting that the third country national and the employer have entered into an employment contract duly ratified by the competent authority in accordance with the current legislation. The amount of pay is determined based on the current legislation.
    2. Duration of residency and work permit is upto 3 years

 

  1. (Proposed Timeline – January 2022) RIGHT OF FAMILY REUNIFICATION FOR 3RD COUNTRY  THAT ARE PART OF THE POLICY ON EMPLOYMENT OF STAFF FROM THIRD COUNTRIES
    1. Direct and free access to the labor market with paid work, to spouses whose maintainer has obtained a residence and work permit in the Republic, and who receive a minimum gross monthly salary of € 2,500 (does not apply to support staff)

 

  1. (Proposed Timeline – 1st Trimester 2022) SIMPLIFICATION AND SPEEDING-UP THE PROCESS GRANTING WORK PERMITS (CATEGORY E – LONG-TERM RESIDENT STATUS)

 

  1. (Proposed Timeline – 1st trimester 2022) SOCIAL INSURANCE
    1. Securing the right to a pension through the Social Insurance Fund by intensifying the efforts to conclude Bilateral Agreements with third countries to be determined by

Ministry of Labour Welfare and Social Insurance so that when a third country national has paid social security contributions insurance in Cyprus, when he returns for permanent residence in his country to be entitled to transfer the contributions paid on the condition that with these contributions he did not acquire any right to old age pension, disability, etc.

 

  1. (Proposed Timeline – January 2022) INTRODUCTION OF DIGITAL NOMAD VISA (MAXIMUM CAP OF 100 BENEFICIARIES)
    1. Beneficiaries – Third-country nationals self-employed / freelancers or employed working remotely with the use of information and communication technologies with employers / clients outside Cyprus.
    2. Residence status –
      1. They have the right to stay in the country for up to one year, with the right to renew for another two years
      2. They can be accompanied by their family members, to whom a residence permit is granted, upon request ending at the same time as the maintainer. During the stay in Cyprus, the spouse/ partner is not allowed (concerns persons who have entered into a cohabitation agreement) and the minor members of the dependent’s family to provide dependent work or engage in any form of economic activity in the country
  • If they reside in the Republic for one or more periods totaling more than 183 days within the same tax year, then they are considered tax residents of Cyprus, in the event that they are not tax residents in any other State
  1. Prerequisites (among others)
    1. Evidence that he/she has sufficient resources, at a level of fixed income, to cover expenses during his/her stay in the country, without burdening the national social welfare system. The amount of sufficient resources is set at three and a half thousand (3,500) euros per month and can be proven:
      1. from the employment or project contract or proof of employment, in the case of dependent employment, services or project
      2. from a bank account. If sufficient resources come from paid employment services, services or project, the above minimum amount refers to net income after payment of the required taxes in the country of employment

 

The above amount is increased by twenty percent (20%) for the spouse or cohabitant and by fifteen percent (15%) for each child

  1. Health Coverage (GESY)
  2. Clean criminal record from the country of residence

 

  1. TAX INCENTIVES

 

(Proposed Timeline – 1st trimester 2022) Expansion of  the tax exemption

  • 50% tax exemption for new residents-employees with pay from an employment of € 55,000.
  • Existing employees with earnings of less than € 100K have the possibility to extend the benefit from 10 to 17 years.
  • Potential beneficiaries of income benefit are persons (€ 55K- € 100K) for a remaining period of 17 years.

 

(Proposed Timeline – 1st trimester 2022) Extension of tax exemption for investment in innovative companies

  • Examination of the possibility of extending the 50% tax exemption for investment in certified innovative companies and by corporate investors.

 

(Proposed Timeline – 1st trimester 2022) Increased (relative to the real) tax deduction for research and development costs

  • Concession of increased discount for research expenses and growth (e.g. by 20%). Eligible research and development costs will be deducted from taxable income in an amount equal to 120% of real.

 

  1. (Proposed Timeline – 1st trimester 2022)  NATURALIZATION

Right to apply for naturalization:

  • After 5 years of residence and work in the Republic, instead of 7 that is valid today
  • Further reduction to 4 years if they meet the criterion of holding a recognized certificate of very good knowledge of the Greek language.

 

A note of importance here:  As per action plan, in addition, the amending legislation will consider the possibility of introducing regulations so that when someone is absent outside Cyprus for work purposes, it is included in the calculation of the time spent in the Republic.

 

ADDITIONAL ACTIONS TO BE EXECUTED INCLUDE:

 

  • (Timeline 2024) – Upgrade of infrastructure for technologies in information and communications and of broadband connection
  • (Timeline – 1st Trimester 2022) Informative campaign for attraction qualified Cypriots who working in abroad and targeted information campaign to qualified workforce employed in countries that political instability prevails (Belarus, Lebanon and Armenia
  • (Timeline – 1st Trimester 2022) Outward push of a total holistic and correctly focused Branding Campaign
  • (Timeline 2022-2023) – Completion of Judicial Reform
  • (Timeline 2022-2023) –  Update of the Companies Regulatory framework
  • (1st Trimester 2022) – Voting of bill for facilitation of strategic investments
  • (1st Trimester 2022) Creation of online platform for young, innovative and high technology companies
  • (1st Trimester 2022) Revision of framework for spin-off companies so as to be more attractive

 

PLANS FOR UPGRADING OF HUMAN RESOURCES/LABOUR INCLUDE

 

  • (Timeline 2023-2024) Upgrade of skills of employees to align with market needs(cross-sectoral abilities, specialized programs and professional certificates)
  • (Timeline 2023-2024) school programs that will still promote more on positive sciences and the related to them professional orientation
  • (Timeline 2022-2023) Alignment of university curriculum with market needs, especially in the technology sectors of information and communications

 

THE PRESENTATIONS (IN GREEK) CAN BE FOUND HERE:

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